Correlation Between Iljin Materials and Automobile
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and Automobile 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 Iljin Materials and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Automobile Pc, you can compare the effects of market volatilities on Iljin Materials and Automobile 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 Iljin Materials with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Automobile.
Diversification Opportunities for Iljin Materials and Automobile
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iljin and Automobile is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Iljin Materials i.e., Iljin Materials and Automobile go up and down completely randomly.
Pair Corralation between Iljin Materials and Automobile
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Materials Co is 1.7 times less risky than Automobile. The stock trades about -0.68 of its potential returns per unit of risk. The Automobile Pc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 68,000 in Automobile Pc on August 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Automobile Pc or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Materials Co vs. Automobile Pc
Performance |
| Timeline |
| Iljin Materials |
| Automobile Pc |
Iljin Materials and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and Automobile
The main advantage of trading using opposite Iljin Materials and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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