Correlation Between Gyeongnam Steel and Hyundai
Can any of the company-specific risk be diversified away by investing in both Gyeongnam Steel 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 Gyeongnam Steel and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gyeongnam Steel Co and Hyundai Motor Co, you can compare the effects of market volatilities on Gyeongnam Steel 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 Gyeongnam Steel with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gyeongnam Steel and Hyundai.
Diversification Opportunities for Gyeongnam Steel and Hyundai
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gyeongnam and Hyundai is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gyeongnam Steel Co and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Gyeongnam Steel 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 Gyeongnam Steel Co 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 Gyeongnam Steel i.e., Gyeongnam Steel and Hyundai go up and down completely randomly.
Pair Corralation between Gyeongnam Steel and Hyundai
Assuming the 90 days trading horizon Gyeongnam Steel is expected to generate 22.69 times less return on investment than Hyundai. But when comparing it to its historical volatility, Gyeongnam Steel Co is 1.65 times less risky than Hyundai. It trades about 0.01 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10,787,700 in Hyundai Motor Co on August 28, 2024 and sell it today you would earn a total of 5,562,300 from holding Hyundai Motor Co or generate 51.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gyeongnam Steel Co vs. Hyundai Motor Co
Performance |
| Timeline |
| Gyeongnam Steel |
| Hyundai Motor |
Gyeongnam Steel and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gyeongnam Steel and Hyundai
The main advantage of trading using opposite Gyeongnam Steel and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gyeongnam Steel 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.| Gyeongnam Steel vs. Sangsin Energy Display | Gyeongnam Steel vs. Dongbang Transport Logistics | Gyeongnam Steel vs. DB Insurance Co | Gyeongnam Steel vs. Digital Power Communications |
| Hyundai vs. Lake Materials Co | Hyundai vs. KB Financial Group | Hyundai vs. Jeju Air Co | Hyundai vs. LAKE MATERIALS LTD |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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