Correlation Between Hyundai Engineering and Global Standard
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and Global Standard 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 Global Standard 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 Global Standard Technology, you can compare the effects of market volatilities on Hyundai Engineering and Global Standard 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 Global Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and Global Standard.
Diversification Opportunities for Hyundai Engineering and Global Standard
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hyundai and Global is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech 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 Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and Global Standard go up and down completely randomly.
Pair Corralation between Hyundai Engineering and Global Standard
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to under-perform the Global Standard. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Engineering Plastics is 2.04 times less risky than Global Standard. The stock trades about -0.14 of its potential returns per unit of risk. The Global Standard Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,662,471 in Global Standard Technology on October 14, 2024 and sell it today you would earn a total of 159,529 from holding Global Standard Technology or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. Global Standard Technology
Performance |
| Timeline |
| Hyundai Engineering |
| Global Standard Tech |
Hyundai Engineering and Global Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and Global Standard
The main advantage of trading using opposite Hyundai Engineering and Global Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, Global Standard 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 Global Standard will offset losses from the drop in Global Standard's long position.| Hyundai Engineering vs. Clean Science co | Hyundai Engineering vs. Dongnam Chemical Co | Hyundai Engineering vs. LG Household Healthcare | Hyundai Engineering vs. Jinro Distillers Co |
| Global Standard vs. Ssangyong Materials Corp | Global Standard vs. Hotel Shilla Co | Global Standard vs. INNOX Advanced Materials | Global Standard vs. Hyundai Engineering Plastics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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