Correlation Between Dong-A Steel and Hyundai
Can any of the company-specific risk be diversified away by investing in both Dong-A 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 Dong-A Steel and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Hyundai Motor, you can compare the effects of market volatilities on Dong-A 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 Dong-A Steel with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong-A Steel and Hyundai.
Diversification Opportunities for Dong-A Steel and Hyundai
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dong-A and Hyundai is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Dong-A 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 Dong A Steel Technology 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 Dong-A Steel i.e., Dong-A Steel and Hyundai go up and down completely randomly.
Pair Corralation between Dong-A Steel and Hyundai
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Hyundai. In addition to that, Dong-A Steel is 2.32 times more volatile than Hyundai Motor. It trades about -0.23 of its total potential returns per unit of risk. Hyundai Motor is currently generating about -0.07 per unit of volatility. If you would invest 21,700,000 in Hyundai Motor on September 18, 2024 and sell it today you would lose (600,000) from holding Hyundai Motor or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Hyundai Motor
Performance |
| Timeline |
| Dong A Steel |
| Hyundai Motor |
Dong-A Steel and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong-A Steel and Hyundai
The main advantage of trading using opposite Dong-A Steel and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong-A 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.| Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. SK Hynix | Dong-A Steel vs. POSCO Holdings |
| Hyundai vs. SBI Investment KOREA | Hyundai vs. A Tech Solution Co | Hyundai vs. Dong A Steel Technology | Hyundai vs. SV Investment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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