Correlation Between Korea Real and Hyundai
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Korea Real and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Hyundai Motor, you can compare the effects of market volatilities on Korea Real 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 Korea Real with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Hyundai.
Diversification Opportunities for Korea Real and Hyundai
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Hyundai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Korea Real 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 Real Estate 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 Korea Real i.e., Korea Real and Hyundai go up and down completely randomly.
Pair Corralation between Korea Real and Hyundai
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.39 times more return on investment than Hyundai. However, Korea Real Estate is 2.59 times less risky than Hyundai. It trades about -0.14 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.06 per unit of risk. If you would invest 108,000 in Korea Real Estate on October 14, 2024 and sell it today you would lose (7,800) from holding Korea Real Estate or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Hyundai Motor
Performance |
| Timeline |
| Korea Real Estate |
| Hyundai Motor |
Korea Real and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Hyundai
The main advantage of trading using opposite Korea Real and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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.| Korea Real vs. Wave Electronics Co | Korea Real vs. NH Investment Securities | Korea Real vs. Seoul Electronics Telecom | Korea Real vs. Samyoung Electronics Co |
| Hyundai vs. Daou Data Corp | Hyundai vs. System and Application | Hyundai vs. Samsung Life Insurance | Hyundai vs. DataSolution |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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