Correlation Between Dongkuk Structures and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Dongkuk Structures and Hyundai Engineering 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 Dongkuk Structures and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongkuk Structures Construction and Hyundai Engineering Construction, you can compare the effects of market volatilities on Dongkuk Structures and Hyundai Engineering 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 Dongkuk Structures with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongkuk Structures and Hyundai Engineering.
Diversification Opportunities for Dongkuk Structures and Hyundai Engineering
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongkuk and Hyundai is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dongkuk Structures Constructio and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Dongkuk Structures 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 Dongkuk Structures Construction are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Dongkuk Structures i.e., Dongkuk Structures and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Dongkuk Structures and Hyundai Engineering
Assuming the 90 days trading horizon Dongkuk Structures Construction is expected to under-perform the Hyundai Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Dongkuk Structures Construction is 2.34 times less risky than Hyundai Engineering. The stock trades about -0.32 of its potential returns per unit of risk. The Hyundai Engineering Construction is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,585,000 in Hyundai Engineering Construction on November 4, 2024 and sell it today you would earn a total of 520,000 from holding Hyundai Engineering Construction or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongkuk Structures Constructio vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Dongkuk Structures |
| Hyundai Engineering |
Dongkuk Structures and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongkuk Structures and Hyundai Engineering
The main advantage of trading using opposite Dongkuk Structures and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongkuk Structures position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| Dongkuk Structures vs. Samsung Life Insurance | Dongkuk Structures vs. Jin Air Co | Dongkuk Structures vs. KakaoBank Corp | Dongkuk Structures vs. GS Retail Co |
| Hyundai Engineering vs. Nable Communications | Hyundai Engineering vs. KB Financial Group | Hyundai Engineering vs. Mobileleader CoLtd | Hyundai Engineering vs. Incar Financial Service |
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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