Correlation Between Korea Information and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and Hyundai Rotem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Hyundai Rotem Co, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Hyundai Rotem.
Diversification Opportunities for Korea Information and Hyundai Rotem
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Hyundai is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem and Korea Information 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 Information Communications 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 Korea Information i.e., Korea Information and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Korea Information and Hyundai Rotem
Assuming the 90 days trading horizon Korea Information is expected to generate 6.72 times less return on investment than Hyundai Rotem. But when comparing it to its historical volatility, Korea Information Communications is 1.26 times less risky than Hyundai Rotem. It trades about 0.08 of its potential returns per unit of risk. Hyundai Rotem Co is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 4,445,000 in Hyundai Rotem Co on October 9, 2024 and sell it today you would earn a total of 785,000 from holding Hyundai Rotem Co or generate 17.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Hyundai Rotem Co
Performance |
| Timeline |
| Korea Information |
| Hyundai Rotem |
Korea Information and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Hyundai Rotem
The main advantage of trading using opposite Korea Information and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| Korea Information vs. Homecast CoLtd | Korea Information vs. Hankuk Steel Wire | Korea Information vs. Polaris Office Corp | Korea Information vs. Green Cross Medical |
| Hyundai Rotem vs. Kyung Chang Industrial | Hyundai Rotem vs. Asiana Airlines | Hyundai Rotem vs. Jinro Distillers Co | Hyundai Rotem vs. PI Advanced Materials |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |