Correlation Between Hyundai Engineering and LG Uplus
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and LG Uplus 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 LG Uplus 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 LG Uplus, you can compare the effects of market volatilities on Hyundai Engineering and LG Uplus 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 LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and LG Uplus.
Diversification Opportunities for Hyundai Engineering and LG Uplus
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and 032640 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus 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 LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and LG Uplus go up and down completely randomly.
Pair Corralation between Hyundai Engineering and LG Uplus
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to under-perform the LG Uplus. In addition to that, Hyundai Engineering is 2.01 times more volatile than LG Uplus. It trades about -0.04 of its total potential returns per unit of risk. LG Uplus is currently generating about 0.04 per unit of volatility. If you would invest 970,163 in LG Uplus on October 11, 2024 and sell it today you would earn a total of 83,837 from holding LG Uplus or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. LG Uplus
Performance |
| Timeline |
| Hyundai Engineering |
| LG Uplus |
Hyundai Engineering and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and LG Uplus
The main advantage of trading using opposite Hyundai Engineering and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' long position.| Hyundai Engineering vs. Woori Technology Investment | Hyundai Engineering vs. Sangsangin Investment Securities | Hyundai Engineering vs. LB Investment | Hyundai Engineering vs. Kisan Telecom Co |
| LG Uplus vs. KB Financial Group | LG Uplus vs. BNK Financial Group | LG Uplus vs. DB Insurance Co | LG Uplus vs. Lotte Non Life Insurance |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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