Correlation Between Han Kook and Hyundai
Can any of the company-specific risk be diversified away by investing in both Han Kook 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 Han Kook and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and Hyundai Motor, you can compare the effects of market volatilities on Han Kook 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 Han Kook with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and Hyundai.
Diversification Opportunities for Han Kook and Hyundai
Average diversification
The 3 months correlation between Han and Hyundai is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Han Kook 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 Han Kook Steel 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 Han Kook i.e., Han Kook and Hyundai go up and down completely randomly.
Pair Corralation between Han Kook and Hyundai
Assuming the 90 days trading horizon Han Kook is expected to generate 6.46 times less return on investment than Hyundai. In addition to that, Han Kook is 1.67 times more volatile than Hyundai Motor. It trades about 0.0 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.05 per unit of volatility. If you would invest 14,581,800 in Hyundai Motor on September 20, 2024 and sell it today you would earn a total of 6,618,200 from holding Hyundai Motor or generate 45.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. Hyundai Motor
Performance |
| Timeline |
| Han Kook Steel |
| Hyundai Motor |
Han Kook and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and Hyundai
The main advantage of trading using opposite Han Kook and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook 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.| Han Kook vs. Dong Il Steel | Han Kook vs. Ni Steel | Han Kook vs. Korea Steel Co | Han Kook vs. Bookook Steel |
| Hyundai vs. E Investment Development | Hyundai vs. KTB Investment Securities | Hyundai vs. Woori Technology Investment | Hyundai vs. Kukil Metal 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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