Correlation Between Hansol Chemical and Hyundai
Can any of the company-specific risk be diversified away by investing in both Hansol Chemical 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 Hansol Chemical and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansol Chemical Co and Hyundai Motor Co, you can compare the effects of market volatilities on Hansol Chemical 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 Hansol Chemical with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemical and Hyundai.
Diversification Opportunities for Hansol Chemical and Hyundai
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hansol and Hyundai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemical Co and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Hansol Chemical 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 Hansol Chemical Co 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 Hansol Chemical i.e., Hansol Chemical and Hyundai go up and down completely randomly.
Pair Corralation between Hansol Chemical and Hyundai
Assuming the 90 days trading horizon Hansol Chemical Co is expected to under-perform the Hyundai. In addition to that, Hansol Chemical is 1.97 times more volatile than Hyundai Motor Co. It trades about -0.07 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.05 per unit of volatility. If you would invest 15,330,000 in Hyundai Motor Co on September 13, 2024 and sell it today you would earn a total of 260,000 from holding Hyundai Motor Co or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Chemical Co vs. Hyundai Motor Co
Performance |
| Timeline |
| Hansol Chemical |
| Hyundai Motor |
Hansol Chemical and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Chemical and Hyundai
The main advantage of trading using opposite Hansol Chemical and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Chemical 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.| Hansol Chemical vs. Woorim Machinery Co | Hansol Chemical vs. Shinsegae Engineering Construction | Hansol Chemical vs. Keyang Electric Machinery | Hansol Chemical vs. Nable Communications |
| Hyundai vs. Hyundai Motor Co | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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