Correlation Between Hyundai Engineering and Histeel
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and Histeel 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 Histeel 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 Histeel, you can compare the effects of market volatilities on Hyundai Engineering and Histeel 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 Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and Histeel.
Diversification Opportunities for Hyundai Engineering and Histeel
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Histeel is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel 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 Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and Histeel go up and down completely randomly.
Pair Corralation between Hyundai Engineering and Histeel
Assuming the 90 days trading horizon Hyundai Engineering is expected to generate 2.92 times less return on investment than Histeel. But when comparing it to its historical volatility, Hyundai Engineering Plastics is 2.11 times less risky than Histeel. It trades about 0.0 of its potential returns per unit of risk. Histeel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 391,033 in Histeel on September 5, 2024 and sell it today you would lose (87,033) from holding Histeel or give up 22.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. Histeel
Performance |
| Timeline |
| Hyundai Engineering |
| Histeel |
Hyundai Engineering and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and Histeel
The main advantage of trading using opposite Hyundai Engineering and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Hyundai Engineering vs. AptaBio Therapeutics | Hyundai Engineering vs. Daewoo SBI SPAC | Hyundai Engineering vs. Dream Security co | Hyundai Engineering vs. Microfriend |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Lotte Chemical Corp | Histeel vs. Hyundai Steel |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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