Correlation Between Industrial Bank and Hyundai
Can any of the company-specific risk be diversified away by investing in both Industrial Bank 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 Industrial Bank and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Hyundai Motor Co, you can compare the effects of market volatilities on Industrial Bank 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 Industrial Bank with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Hyundai.
Diversification Opportunities for Industrial Bank and Hyundai
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Industrial and Hyundai is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Industrial Bank 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 Industrial Bank 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 Industrial Bank i.e., Industrial Bank and Hyundai go up and down completely randomly.
Pair Corralation between Industrial Bank and Hyundai
Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.06 times less return on investment than Hyundai. But when comparing it to its historical volatility, Industrial Bank is 1.66 times less risky than Hyundai. It trades about 0.07 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,641,900 in Hyundai Motor Co on November 3, 2024 and sell it today you would earn a total of 2,978,100 from holding Hyundai Motor Co or generate 21.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
Industrial Bank vs. Hyundai Motor Co
Performance |
| Timeline |
| Industrial Bank |
| Hyundai Motor |
Industrial Bank and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Hyundai
The main advantage of trading using opposite Industrial Bank and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank 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.| Industrial Bank vs. Coloray International Investment | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. DSC Investment | Industrial Bank vs. Tway Air Co |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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