Correlation Between Hyundai Engineering and IL Science
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and IL Science 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 IL Science 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 IL Science Co, you can compare the effects of market volatilities on Hyundai Engineering and IL Science 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 IL Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and IL Science.
Diversification Opportunities for Hyundai Engineering and IL Science
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and 307180 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and IL Science Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IL Science 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 IL Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IL Science has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and IL Science go up and down completely randomly.
Pair Corralation between Hyundai Engineering and IL Science
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to generate 0.57 times more return on investment than IL Science. However, Hyundai Engineering Plastics is 1.77 times less risky than IL Science. It trades about -0.15 of its potential returns per unit of risk. IL Science Co is currently generating about -0.18 per unit of risk. If you would invest 385,500 in Hyundai Engineering Plastics on September 1, 2024 and sell it today you would lose (21,500) from holding Hyundai Engineering Plastics or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. IL Science Co
Performance |
| Timeline |
| Hyundai Engineering |
| IL Science |
Hyundai Engineering and IL Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and IL Science
The main advantage of trading using opposite Hyundai Engineering and IL Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, IL Science 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 IL Science will offset losses from the drop in IL Science's long position.| Hyundai Engineering vs. ABCO Electronics Co | Hyundai Engineering vs. Daiyang Metal Co | Hyundai Engineering vs. Daejung Chemicals Metals | Hyundai Engineering vs. DAEDUCK ELECTRONICS CoLtd |
| IL Science vs. Samyang Foods Co | IL Science vs. Foodnamoo | IL Science vs. Nice Information Telecommunication | IL Science vs. Samlip General Foods |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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