Correlation Between Hyundai Rotem and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Hyundai Rotem and Busan Industrial 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 Rotem and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Rotem Co and Busan Industrial Co, you can compare the effects of market volatilities on Hyundai Rotem and Busan Industrial 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 Rotem with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Rotem and Busan Industrial.
Diversification Opportunities for Hyundai Rotem and Busan Industrial
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Busan is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Rotem Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Hyundai Rotem 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 Rotem Co are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Hyundai Rotem i.e., Hyundai Rotem and Busan Industrial go up and down completely randomly.
Pair Corralation between Hyundai Rotem and Busan Industrial
Assuming the 90 days trading horizon Hyundai Rotem Co is expected to generate 1.43 times more return on investment than Busan Industrial. However, Hyundai Rotem is 1.43 times more volatile than Busan Industrial Co. It trades about 0.29 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.17 per unit of risk. If you would invest 4,995,000 in Hyundai Rotem Co on October 22, 2024 and sell it today you would earn a total of 605,000 from holding Hyundai Rotem Co or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Rotem Co vs. Busan Industrial Co
Performance |
| Timeline |
| Hyundai Rotem |
| Busan Industrial |
Hyundai Rotem and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Rotem and Busan Industrial
The main advantage of trading using opposite Hyundai Rotem and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Rotem position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Hyundai Rotem vs. KTB Investment Securities | Hyundai Rotem vs. SV Investment | Hyundai Rotem vs. Shinhan Inverse Copper | Hyundai Rotem vs. Korean Drug Co |
| Busan Industrial vs. Dong A Steel Technology | Busan Industrial vs. Shinhan Inverse Silver | Busan Industrial vs. DAEDUCK ELECTRONICS CoLtd | Busan Industrial vs. Hanil Iron 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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