Correlation Between Hyundai Rotem and Automobile
Can any of the company-specific risk be diversified away by investing in both Hyundai Rotem and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Hyundai Rotem and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Rotem and Automobile.
Diversification Opportunities for Hyundai Rotem and Automobile
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyundai and Automobile is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Rotem Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Hyundai Rotem i.e., Hyundai Rotem and Automobile go up and down completely randomly.
Pair Corralation between Hyundai Rotem and Automobile
Assuming the 90 days trading horizon Hyundai Rotem Co is expected to under-perform the Automobile. In addition to that, Hyundai Rotem is 1.18 times more volatile than Automobile Pc. It trades about -0.18 of its total potential returns per unit of risk. Automobile Pc is currently generating about -0.06 per unit of volatility. If you would invest 71,300 in Automobile Pc on September 14, 2024 and sell it today you would lose (5,300) from holding Automobile Pc or give up 7.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Rotem Co vs. Automobile Pc
Performance |
| Timeline |
| Hyundai Rotem |
| Automobile Pc |
Hyundai Rotem and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Rotem and Automobile
The main advantage of trading using opposite Hyundai Rotem and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Rotem position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Hyundai Rotem vs. Automobile Pc | Hyundai Rotem vs. Chorokbaem Healthcare Co | Hyundai Rotem vs. Sangsin Energy Display | Hyundai Rotem vs. LG Household Healthcare |
| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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