Correlation Between Korea Zinc and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Korea Zinc and Hyundai Heavy 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 Korea Zinc and Hyundai Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Zinc and Hyundai Heavy Industries, you can compare the effects of market volatilities on Korea Zinc and Hyundai Heavy 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 Korea Zinc with a short position of Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Hyundai Heavy.
Diversification Opportunities for Korea Zinc and Hyundai Heavy
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Hyundai is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries and Korea Zinc 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 Korea Zinc are associated (or correlated) with Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Korea Zinc i.e., Korea Zinc and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Korea Zinc and Hyundai Heavy
Assuming the 90 days trading horizon Korea Zinc is expected to generate 1.14 times more return on investment than Hyundai Heavy. However, Korea Zinc is 1.14 times more volatile than Hyundai Heavy Industries. It trades about 0.01 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about -0.04 per unit of risk. If you would invest 100,000,000 in Korea Zinc on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Korea Zinc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Korea Zinc |
| Hyundai Heavy Industries |
Korea Zinc and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Hyundai Heavy
The main advantage of trading using opposite Korea Zinc and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc position performs unexpectedly, Hyundai Heavy 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 Heavy will offset losses from the drop in Hyundai Heavy's long position.| Korea Zinc vs. Sungdo Engineering Construction | Korea Zinc vs. Tuksu Engineering ConstructionLtd | Korea Zinc vs. Hanshin Construction Co | Korea Zinc vs. KIWI Media Group |
| Hyundai Heavy vs. Infinitt Healthcare Co | Hyundai Heavy vs. Koryo Credit Information | Hyundai Heavy vs. SCI Information Service | Hyundai Heavy vs. CU Medical Systems |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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