Correlation Between Sungdo Engineering and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Sungdo Engineering and Hyundai Engineering 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 Sungdo Engineering and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungdo Engineering Construction and Hyundai Engineering Plastics, you can compare the effects of market volatilities on Sungdo Engineering and Hyundai Engineering 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 Sungdo Engineering with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungdo Engineering and Hyundai Engineering.
Diversification Opportunities for Sungdo Engineering and Hyundai Engineering
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungdo and Hyundai is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Sungdo Engineering 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 Sungdo Engineering Construction are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Sungdo Engineering and Hyundai Engineering
Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to generate 1.4 times more return on investment than Hyundai Engineering. However, Sungdo Engineering is 1.4 times more volatile than Hyundai Engineering Plastics. It trades about 0.01 of its potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about 0.0 per unit of risk. If you would invest 491,632 in Sungdo Engineering Construction on September 26, 2024 and sell it today you would lose (6,132) from holding Sungdo Engineering Construction or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungdo Engineering Constructio vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| Sungdo Engineering |
| Hyundai Engineering |
Sungdo Engineering and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungdo Engineering and Hyundai Engineering
The main advantage of trading using opposite Sungdo Engineering and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungdo Engineering position performs unexpectedly, Hyundai Engineering 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 Engineering will offset losses from the drop in Hyundai Engineering's long position.| Sungdo Engineering vs. Busan Industrial Co | Sungdo Engineering vs. Busan Ind | Sungdo Engineering vs. Mirae Asset Daewoo | Sungdo Engineering vs. Shinhan WTI Futures |
| Hyundai Engineering vs. Seoam Machinery Industry | Hyundai Engineering vs. Sungdo Engineering Construction | Hyundai Engineering vs. Semyung Electric Machinery | Hyundai Engineering vs. Seohee Construction 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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