Correlation Between Hyundai Engineering and RF Materials
Can any of the company-specific risk be diversified away by investing in both Hyundai Engineering and RF 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 RF 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 RF Materials Co, you can compare the effects of market volatilities on Hyundai Engineering and RF 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Engineering and RF Materials.
Diversification Opportunities for Hyundai Engineering and RF Materials
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and 327260 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and RF Materials go up and down completely randomly.
Pair Corralation between Hyundai Engineering and RF Materials
Assuming the 90 days trading horizon Hyundai Engineering Plastics is expected to under-perform the RF Materials. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Engineering Plastics is 1.73 times less risky than RF Materials. The stock trades about -0.09 of its potential returns per unit of risk. The RF Materials Co is currently generating about 0.68 of returns per unit of risk over similar time horizon. If you would invest 472,500 in RF Materials Co on October 22, 2024 and sell it today you would earn a total of 107,500 from holding RF Materials Co or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Engineering Plastics vs. RF Materials Co
Performance |
| Timeline |
| Hyundai Engineering |
| RF Materials |
Hyundai Engineering and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Engineering and RF Materials
The main advantage of trading using opposite Hyundai Engineering and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Engineering position performs unexpectedly, RF 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 RF Materials will offset losses from the drop in RF Materials' long position.| Hyundai Engineering vs. Hana Technology Co | Hyundai Engineering vs. Korea Alcohol Industrial | Hyundai Engineering vs. Bosung Power Technology | Hyundai Engineering vs. Automobile Pc |
| RF Materials vs. Pureun Mutual Savings | RF Materials vs. Samyoung Electronics Co | RF Materials vs. Korean Drug Co | RF Materials vs. KakaoBank Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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