Correlation Between Daewoo Electronic and Hyundai
Can any of the company-specific risk be diversified away by investing in both Daewoo Electronic and Hyundai 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 Daewoo Electronic and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Electronic Components and Hyundai Motor, you can compare the effects of market volatilities on Daewoo Electronic and Hyundai 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 Daewoo Electronic with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Electronic and Hyundai.
Diversification Opportunities for Daewoo Electronic and Hyundai
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daewoo and Hyundai is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Electronic Components and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Daewoo Electronic 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 Daewoo Electronic Components are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Daewoo Electronic i.e., Daewoo Electronic and Hyundai go up and down completely randomly.
Pair Corralation between Daewoo Electronic and Hyundai
Assuming the 90 days trading horizon Daewoo Electronic Components is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo Electronic Components is 3.61 times less risky than Hyundai. The stock trades about -0.02 of its potential returns per unit of risk. The Hyundai Motor is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 21,100,000 in Hyundai Motor on October 17, 2024 and sell it today you would earn a total of 1,100,000 from holding Hyundai Motor or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Electronic Components vs. Hyundai Motor
Performance |
| Timeline |
| Daewoo Electronic |
| Hyundai Motor |
Daewoo Electronic and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Electronic and Hyundai
The main advantage of trading using opposite Daewoo Electronic and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Electronic position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Daewoo Electronic vs. Samsung Electronics Co | Daewoo Electronic vs. Samsung Electronics Co | Daewoo Electronic vs. LG Energy Solution | Daewoo Electronic vs. SK Hynix |
| Hyundai vs. Vissem Electronics Co | Hyundai vs. Samyoung Electronics Co | Hyundai vs. Neungyule Education | Hyundai vs. Daewoo Electronic Components |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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