Correlation Between Hyundai Engineering and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and Hana Materials 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 Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on Hyundai Engineering and Hana Materials 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and Hana Materials.
Diversification Opportunities for Hyundai Engineering and Hana Materials
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Hana is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and Hana Materials go up and down completely randomly.
Pair Corralation between Hyundai Engineering and Hana Materials
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to generate 0.54 times more return on investment than Hana Materials. However, Hyundai Engineering Plastics is 1.84 times less risky than Hana Materials. It trades about -0.08 of its potential returns per unit of risk. Hana Materials is currently generating about -0.13 per unit of risk. If you would invest 407,500 in Hyundai Engineering Plastics on November 3, 2024 and sell it today you would lose (62,000) from holding Hyundai Engineering Plastics or give up 15.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. Hana Materials
Performance |
| Timeline |
| Hyundai Engineering |
| Hana Materials |
Hyundai Engineering and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and Hana Materials
The main advantage of trading using opposite Hyundai Engineering and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Hyundai Engineering vs. Daewon Media Co | Hyundai Engineering vs. Namhae Chemical | Hyundai Engineering vs. KPX Green Chemical | Hyundai Engineering vs. Kg Chemical |
| Hana Materials vs. ABCO Electronics Co | Hana Materials vs. Air Busan Co | Hana Materials vs. Daeduck Electronics Co | Hana Materials vs. Dongbang Transport Logistics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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