Correlation Between Digital Power and Hyundai
Can any of the company-specific risk be diversified away by investing in both Digital Power 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 Digital Power and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Power Communications and Hyundai Motor Co, you can compare the effects of market volatilities on Digital Power 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 Digital Power with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Hyundai.
Diversification Opportunities for Digital Power and Hyundai
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and Hyundai is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Digital Power 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 Digital Power Communications 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 Digital Power i.e., Digital Power and Hyundai go up and down completely randomly.
Pair Corralation between Digital Power and Hyundai
Assuming the 90 days trading horizon Digital Power Communications is expected to under-perform the Hyundai. In addition to that, Digital Power is 1.32 times more volatile than Hyundai Motor Co. It trades about -0.02 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.01 per unit of volatility. If you would invest 15,590,000 in Hyundai Motor Co on October 12, 2024 and sell it today you would lose (40,000) from holding Hyundai Motor Co or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Hyundai Motor Co
Performance |
| Timeline |
| Digital Power Commun |
| Hyundai Motor |
Digital Power and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Hyundai
The main advantage of trading using opposite Digital Power and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power 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.| Digital Power vs. Taegu Broadcasting | Digital Power vs. Nam Hwa Construction | Digital Power vs. Seohee Construction Co | Digital Power vs. Iljin Display |
| Hyundai vs. Youngbo Chemical Co | Hyundai vs. Digital Power Communications | Hyundai vs. ECSTELECOM Co | Hyundai vs. Lotte Data Communication |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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