Correlation Between Hyundai Rotem and Kyung Chang
Can any of the company-specific risk be diversified away by investing in both Hyundai Rotem and Kyung Chang 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 Kyung Chang 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 Kyung Chang Industrial, you can compare the effects of market volatilities on Hyundai Rotem and Kyung Chang 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 Kyung Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Rotem and Kyung Chang.
Diversification Opportunities for Hyundai Rotem and Kyung Chang
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Kyung is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Rotem Co and Kyung Chang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung Chang 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 Kyung Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung Chang Industrial has no effect on the direction of Hyundai Rotem i.e., Hyundai Rotem and Kyung Chang go up and down completely randomly.
Pair Corralation between Hyundai Rotem and Kyung Chang
Assuming the 90 days trading horizon Hyundai Rotem Co is expected to generate 0.96 times more return on investment than Kyung Chang. However, Hyundai Rotem Co is 1.04 times less risky than Kyung Chang. It trades about 0.31 of its potential returns per unit of risk. Kyung Chang Industrial is currently generating about 0.12 per unit of risk. If you would invest 4,925,000 in Hyundai Rotem Co on October 25, 2024 and sell it today you would earn a total of 725,000 from holding Hyundai Rotem Co or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hyundai Rotem Co vs. Kyung Chang Industrial
Performance |
| Timeline |
| Hyundai Rotem |
| Kyung Chang Industrial |
Hyundai Rotem and Kyung Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Rotem and Kyung Chang
The main advantage of trading using opposite Hyundai Rotem and Kyung Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Rotem position performs unexpectedly, Kyung Chang 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 Kyung Chang will offset losses from the drop in Kyung Chang's long position.| Hyundai Rotem vs. Iljin Display | Hyundai Rotem vs. Ssangyong Information Communication | Hyundai Rotem vs. Seoyon Topmetal Co | Hyundai Rotem vs. LG Display Co |
| Kyung Chang vs. Cube Entertainment | Kyung Chang vs. Daewon Media Co | Kyung Chang vs. Ssangyong Information Communication | Kyung Chang vs. Nice Information Telecommunication |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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