Correlation Between Hyundai Engineering and Sung Bo
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and Sung Bo 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 Engineering and Sung Bo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Engineering Plastics and Sung Bo Chemicals, you can compare the effects of market volatilities on Hyundai Engineering and Sung Bo 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 Engineering with a short position of Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and Sung Bo.
Diversification Opportunities for Hyundai Engineering and Sung Bo
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Sung is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals and Hyundai Engineering 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 Engineering Plastics are associated (or correlated) with Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and Sung Bo go up and down completely randomly.
Pair Corralation between Hyundai Engineering and Sung Bo
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to generate 1.08 times more return on investment than Sung Bo. However, Hyundai Engineering is 1.08 times more volatile than Sung Bo Chemicals. It trades about -0.01 of its potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.02 per unit of risk. If you would invest 385,128 in Hyundai Engineering Plastics on September 12, 2024 and sell it today you would lose (53,628) from holding Hyundai Engineering Plastics or give up 13.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. Sung Bo Chemicals
Performance |
| Timeline |
| Hyundai Engineering |
| Sung Bo Chemicals |
Hyundai Engineering and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and Sung Bo
The main advantage of trading using opposite Hyundai Engineering and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| Hyundai Engineering vs. Hankuk Steel Wire | Hyundai Engineering vs. Jeil Steel Mfg | Hyundai Engineering vs. Finebesteel | Hyundai Engineering vs. Dong A Steel Technology |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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