Correlation Between Hyundai and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both Hyundai and ENERGYMACHINERY KOREA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyundai and ENERGYMACHINERY KOREA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Hyundai and ENERGYMACHINERY KOREA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hyundai with a short position of ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and ENERGYMACHINERY KOREA.
Diversification Opportunities for Hyundai and ENERGYMACHINERY KOREA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and ENERGYMACHINERY is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA and Hyundai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hyundai Motor Co are associated (or correlated) with ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Hyundai i.e., Hyundai and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between Hyundai and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.76 times more return on investment than ENERGYMACHINERY KOREA. However, Hyundai Motor Co is 1.31 times less risky than ENERGYMACHINERY KOREA. It trades about 0.0 of its potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about -0.26 per unit of risk. If you would invest 16,100,000 in Hyundai Motor Co on September 1, 2024 and sell it today you would lose (80,000) from holding Hyundai Motor Co or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| Hyundai Motor |
| ENERGYMACHINERY KOREA |
Hyundai and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and ENERGYMACHINERY KOREA
The main advantage of trading using opposite Hyundai and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, ENERGYMACHINERY KOREA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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