Correlation Between Korea Electronic and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Korea Electronic and Hyundai Home 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 Electronic and Hyundai Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and Hyundai Home Shopping, you can compare the effects of market volatilities on Korea Electronic and Hyundai Home 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 Electronic with a short position of Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and Hyundai Home.
Diversification Opportunities for Korea Electronic and Hyundai Home
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Hyundai is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping and Korea Electronic 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 Electronic Certification are associated (or correlated) with Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Korea Electronic i.e., Korea Electronic and Hyundai Home go up and down completely randomly.
Pair Corralation between Korea Electronic and Hyundai Home
Assuming the 90 days trading horizon Korea Electronic Certification is expected to under-perform the Hyundai Home. In addition to that, Korea Electronic is 1.11 times more volatile than Hyundai Home Shopping. It trades about -0.08 of its total potential returns per unit of risk. Hyundai Home Shopping is currently generating about 0.03 per unit of volatility. If you would invest 4,270,000 in Hyundai Home Shopping on September 25, 2024 and sell it today you would earn a total of 320,000 from holding Hyundai Home Shopping or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electronic Certification vs. Hyundai Home Shopping
Performance |
| Timeline |
| Korea Electronic Cer |
| Hyundai Home Shopping |
Korea Electronic and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and Hyundai Home
The main advantage of trading using opposite Korea Electronic and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic position performs unexpectedly, Hyundai Home 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 Home will offset losses from the drop in Hyundai Home's long position.| Korea Electronic vs. Busan Industrial Co | Korea Electronic vs. Busan Ind | Korea Electronic vs. Mirae Asset Daewoo | Korea Electronic vs. Shinhan WTI Futures |
| Hyundai Home vs. KIWI Media Group | Hyundai Home vs. Pan Entertainment Co | Hyundai Home vs. Kbi Metal Co | Hyundai Home vs. SM Entertainment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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