Correlation Between Korea Alcohol and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Hyundai Engineering 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 Alcohol and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Hyundai Engineering Construction, you can compare the effects of market volatilities on Korea Alcohol and Hyundai Engineering 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 Alcohol with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Hyundai Engineering.
Diversification Opportunities for Korea Alcohol and Hyundai Engineering
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and Hyundai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Korea Alcohol 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 Alcohol Industrial are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Korea Alcohol and Hyundai Engineering
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.58 times more return on investment than Hyundai Engineering. However, Korea Alcohol Industrial is 1.73 times less risky than Hyundai Engineering. It trades about 0.53 of its potential returns per unit of risk. Hyundai Engineering Construction is currently generating about 0.11 per unit of risk. If you would invest 792,112 in Korea Alcohol Industrial on October 15, 2024 and sell it today you would earn a total of 71,888 from holding Korea Alcohol Industrial or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Hyundai Engineering |
Korea Alcohol and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Hyundai Engineering
The main advantage of trading using opposite Korea Alcohol and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Hyundai Engineering 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 Engineering will offset losses from the drop in Hyundai Engineering's long position.| Korea Alcohol vs. Innowireless Co | Korea Alcohol vs. Koryo Credit Information | Korea Alcohol vs. NICE Information Service | Korea Alcohol vs. System and Application |
| Hyundai Engineering vs. KT Submarine Telecom | Hyundai Engineering vs. E Investment Development | Hyundai Engineering vs. Korea Information Communications | Hyundai Engineering vs. Polaris Office Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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