Correlation Between Hanwha Aerospace and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Hanwha Aerospace 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 Hanwha Aerospace and Hyundai Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Aerospace Co and Hyundai Heavy Industries, you can compare the effects of market volatilities on Hanwha Aerospace 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 Hanwha Aerospace with a short position of Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Aerospace and Hyundai Heavy.
Diversification Opportunities for Hanwha Aerospace and Hyundai Heavy
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanwha and Hyundai is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Aerospace Co 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 Hanwha Aerospace 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 Hanwha Aerospace Co 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 Hanwha Aerospace i.e., Hanwha Aerospace and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Hanwha Aerospace and Hyundai Heavy
Assuming the 90 days trading horizon Hanwha Aerospace Co is expected to generate 1.85 times more return on investment than Hyundai Heavy. However, Hanwha Aerospace is 1.85 times more volatile than Hyundai Heavy Industries. It trades about 0.12 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about 0.05 per unit of risk. If you would invest 6,669,160 in Hanwha Aerospace Co on August 24, 2024 and sell it today you would earn a total of 31,280,840 from holding Hanwha Aerospace Co or generate 469.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Aerospace Co vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Hanwha Aerospace |
| Hyundai Heavy Industries |
Hanwha Aerospace and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Aerospace and Hyundai Heavy
The main advantage of trading using opposite Hanwha Aerospace and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Aerospace 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.| Hanwha Aerospace vs. Insung Information Co | Hanwha Aerospace vs. Korea Information Engineering | Hanwha Aerospace vs. Samhwa Paint Industrial | Hanwha Aerospace vs. MetaLabs Co |
| Hyundai Heavy vs. Samsung Electronics Co | Hyundai Heavy vs. Samsung Electronics Co | Hyundai Heavy vs. Hyundai Motor Co | Hyundai Heavy vs. Hyundai Motor |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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