Correlation Between Wonil Special and Hyundai
Can any of the company-specific risk be diversified away by investing in both Wonil Special 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 Wonil Special and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Hyundai Motor Co, you can compare the effects of market volatilities on Wonil Special 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 Wonil Special with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Hyundai.
Diversification Opportunities for Wonil Special and Hyundai
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wonil and Hyundai is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Wonil Special 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 Wonil Special Steel 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 Wonil Special i.e., Wonil Special and Hyundai go up and down completely randomly.
Pair Corralation between Wonil Special and Hyundai
Assuming the 90 days trading horizon Wonil Special is expected to generate 1.71 times less return on investment than Hyundai. But when comparing it to its historical volatility, Wonil Special Steel is 1.38 times less risky than Hyundai. It trades about 0.12 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 15,260,000 in Hyundai Motor Co on October 29, 2024 and sell it today you would earn a total of 440,000 from holding Hyundai Motor Co or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Hyundai Motor Co
Performance |
| Timeline |
| Wonil Special Steel |
| Hyundai Motor |
Wonil Special and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Hyundai
The main advantage of trading using opposite Wonil Special and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special 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.| Wonil Special vs. Dong A Steel Technology | Wonil Special vs. Namhwa Industrial Co | Wonil Special vs. Eagon Industrial Co | Wonil Special vs. Lee Ku Industrial |
| Hyundai vs. Kukdong Oil Chemicals | Hyundai vs. Wonil Special Steel | Hyundai vs. KPX Green Chemical | Hyundai vs. Korean Reinsurance Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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