Correlation Between Korea New and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Korea New and Hyundai Heavy 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 Heavy 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 Heavy Industries, you can compare the effects of market volatilities on Korea New and Hyundai Heavy 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 Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Hyundai Heavy.
Diversification Opportunities for Korea New and Hyundai Heavy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Hyundai is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries 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 Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Korea New i.e., Korea New and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Korea New and Hyundai Heavy
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.42 times more return on investment than Hyundai Heavy. However, Korea New Network is 2.38 times less risky than Hyundai Heavy. It trades about 0.09 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about -0.16 per unit of risk. If you would invest 79,600 in Korea New Network on November 27, 2024 and sell it today you would earn a total of 1,400 from holding Korea New Network or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Korea New Network |
| Hyundai Heavy Industries |
Korea New and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Hyundai Heavy
The main advantage of trading using opposite Korea New and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Hyundai Heavy 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 Heavy will offset losses from the drop in Hyundai Heavy's long position.| Korea New vs. Tae Kyung Chemical | Korea New vs. Jin Air Co | Korea New vs. Korea Air Svc | Korea New vs. SK Chemicals Co |
| Hyundai Heavy vs. TJ media Co | Hyundai Heavy vs. ChipsMedia | Hyundai Heavy vs. Korea Alcohol Industrial | Hyundai Heavy vs. DC Media 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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