Correlation Between Korea New and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Korea New 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 Korea New and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Hyundai Engineering Construction, you can compare the effects of market volatilities on Korea New 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 Korea New with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Hyundai Engineering.
Diversification Opportunities for Korea New and Hyundai Engineering
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Hyundai is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Korea New 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 New Network 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 Korea New i.e., Korea New and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Korea New and Hyundai Engineering
Assuming the 90 days trading horizon Korea New Network is expected to under-perform the Hyundai Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Korea New Network is 2.49 times less risky than Hyundai Engineering. The stock trades about 0.0 of its potential returns per unit of risk. The Hyundai Engineering Construction is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,105,000 in Hyundai Engineering Construction on December 1, 2024 and sell it today you would earn a total of 245,000 from holding Hyundai Engineering Construction or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Korea New Network |
| Hyundai Engineering |
Korea New and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Hyundai Engineering
The main advantage of trading using opposite Korea New and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New 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.| Korea New vs. Mirai Semiconductors Co | Korea New vs. Cloud Air CoLtd | Korea New vs. Aprogen Healthcare Games | Korea New vs. Jin Air Co |
| Hyundai Engineering vs. Korea Investment Holdings | Hyundai Engineering vs. Digital Power Communications | Hyundai Engineering vs. SBI Investment KOREA | Hyundai Engineering vs. KTB Investment Securities |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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