Correlation Between Jinro Distillers and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Jinro Distillers and Hyundai Rotem 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 Jinro Distillers and Hyundai Rotem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jinro Distillers Co and Hyundai Rotem Co, you can compare the effects of market volatilities on Jinro Distillers and Hyundai Rotem 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 Jinro Distillers with a short position of Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinro Distillers and Hyundai Rotem.
Diversification Opportunities for Jinro Distillers and Hyundai Rotem
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jinro and Hyundai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jinro Distillers Co and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem and Jinro Distillers 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 Jinro Distillers Co are associated (or correlated) with Hyundai Rotem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Rotem has no effect on the direction of Jinro Distillers i.e., Jinro Distillers and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Jinro Distillers and Hyundai Rotem
Assuming the 90 days trading horizon Jinro Distillers is expected to generate 6.02 times less return on investment than Hyundai Rotem. But when comparing it to its historical volatility, Jinro Distillers Co is 4.66 times less risky than Hyundai Rotem. It trades about 0.24 of its potential returns per unit of risk. Hyundai Rotem Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,925,000 in Hyundai Rotem Co on October 25, 2024 and sell it today you would earn a total of 725,000 from holding Hyundai Rotem Co or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Jinro Distillers Co vs. Hyundai Rotem Co
Performance |
| Timeline |
| Jinro Distillers |
| Hyundai Rotem |
Jinro Distillers and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jinro Distillers and Hyundai Rotem
The main advantage of trading using opposite Jinro Distillers and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinro Distillers position performs unexpectedly, Hyundai Rotem 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 Rotem will offset losses from the drop in Hyundai Rotem's long position.| Jinro Distillers vs. DB Insurance Co | Jinro Distillers vs. Cloud Air CoLtd | Jinro Distillers vs. Air Busan Co | Jinro Distillers vs. Daou Data Corp |
| Hyundai Rotem vs. Iljin Display | Hyundai Rotem vs. Ssangyong Information Communication | Hyundai Rotem vs. Seoyon Topmetal Co | Hyundai Rotem vs. LG Display 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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