Correlation Between ECSTELECOM and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM 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 ECSTELECOM and Hyundai Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Hyundai Heavy Industries, you can compare the effects of market volatilities on ECSTELECOM 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 ECSTELECOM with a short position of Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Hyundai Heavy.
Diversification Opportunities for ECSTELECOM and Hyundai Heavy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ECSTELECOM and Hyundai is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co 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 ECSTELECOM 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 ECSTELECOM Co 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 ECSTELECOM i.e., ECSTELECOM and Hyundai Heavy go up and down completely randomly.
Pair Corralation between ECSTELECOM and Hyundai Heavy
Assuming the 90 days trading horizon ECSTELECOM Co is expected to under-perform the Hyundai Heavy. But the stock apears to be less risky and, when comparing its historical volatility, ECSTELECOM Co is 1.49 times less risky than Hyundai Heavy. The stock trades about -0.07 of its potential returns per unit of risk. The Hyundai Heavy Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,100,000 in Hyundai Heavy Industries on August 29, 2024 and sell it today you would lose (90,000) from holding Hyundai Heavy Industries or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Hyundai Heavy Industries
Performance |
| Timeline |
| ECSTELECOM |
| Hyundai Heavy Industries |
ECSTELECOM and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Hyundai Heavy
The main advantage of trading using opposite ECSTELECOM and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM 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.| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Shinhan WTI Futures | ECSTELECOM vs. Finebesteel |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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