Correlation Between Hyundai Home and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Hyundai Home and Daewon Chemical 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 Hyundai Home and Daewon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Home Shopping and Daewon Chemical Co, you can compare the effects of market volatilities on Hyundai Home and Daewon Chemical 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 Hyundai Home with a short position of Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Home and Daewon Chemical.
Diversification Opportunities for Hyundai Home and Daewon Chemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hyundai and Daewon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Home Shopping and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Chemical and Hyundai Home 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 Hyundai Home Shopping are associated (or correlated) with Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Hyundai Home i.e., Hyundai Home and Daewon Chemical go up and down completely randomly.
Pair Corralation between Hyundai Home and Daewon Chemical
Assuming the 90 days trading horizon Hyundai Home Shopping is expected to generate 1.94 times more return on investment than Daewon Chemical. However, Hyundai Home is 1.94 times more volatile than Daewon Chemical Co. It trades about 0.08 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about 0.0 per unit of risk. If you would invest 4,565,000 in Hyundai Home Shopping on October 28, 2024 and sell it today you would earn a total of 115,000 from holding Hyundai Home Shopping or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Home Shopping vs. Daewon Chemical Co
Performance |
| Timeline |
| Hyundai Home Shopping |
| Daewon Chemical |
Hyundai Home and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Home and Daewon Chemical
The main advantage of trading using opposite Hyundai Home and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Home position performs unexpectedly, Daewon Chemical 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 Daewon Chemical will offset losses from the drop in Daewon Chemical's long position.| Hyundai Home vs. KB Financial Group | Hyundai Home vs. Shinhan Financial Group | Hyundai Home vs. Hana Financial | Hyundai Home vs. Woori Financial Group |
| Daewon Chemical vs. ABOV Semiconductor Co | Daewon Chemical vs. Daejung Chemicals Metals | Daewon Chemical vs. Sewoon Medical Co | Daewon Chemical vs. Moonbae Steel |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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