Correlation Between Hyundai Engineering and CJ Cheiljedang
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and CJ Cheiljedang 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 CJ Cheiljedang 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 CJ Cheiljedang, you can compare the effects of market volatilities on Hyundai Engineering and CJ Cheiljedang 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 CJ Cheiljedang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and CJ Cheiljedang.
Diversification Opportunities for Hyundai Engineering and CJ Cheiljedang
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and 097950 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and CJ Cheiljedang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Cheiljedang 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 CJ Cheiljedang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Cheiljedang has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and CJ Cheiljedang go up and down completely randomly.
Pair Corralation between Hyundai Engineering and CJ Cheiljedang
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to generate 0.79 times more return on investment than CJ Cheiljedang. However, Hyundai Engineering Plastics is 1.27 times less risky than CJ Cheiljedang. It trades about -0.05 of its potential returns per unit of risk. CJ Cheiljedang is currently generating about -0.04 per unit of risk. If you would invest 430,000 in Hyundai Engineering Plastics on September 3, 2024 and sell it today you would lose (66,000) from holding Hyundai Engineering Plastics or give up 15.35% 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. CJ Cheiljedang
Performance |
| Timeline |
| Hyundai Engineering |
| CJ Cheiljedang |
Hyundai Engineering and CJ Cheiljedang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and CJ Cheiljedang
The main advantage of trading using opposite Hyundai Engineering and CJ Cheiljedang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, CJ Cheiljedang 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 CJ Cheiljedang will offset losses from the drop in CJ Cheiljedang's long position.| Hyundai Engineering vs. AptaBio Therapeutics | Hyundai Engineering vs. Daewoo SBI SPAC | Hyundai Engineering vs. Dream Security co | Hyundai Engineering vs. Microfriend |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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