Correlation Between ENF Technology and Hyundai
Can any of the company-specific risk be diversified away by investing in both ENF Technology and Hyundai 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 ENF Technology and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENF Technology Co and Hyundai Motor, you can compare the effects of market volatilities on ENF Technology and Hyundai 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 ENF Technology with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENF Technology and Hyundai.
Diversification Opportunities for ENF Technology and Hyundai
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ENF and Hyundai is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ENF Technology Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and ENF Technology 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 ENF Technology Co are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of ENF Technology i.e., ENF Technology and Hyundai go up and down completely randomly.
Pair Corralation between ENF Technology and Hyundai
Assuming the 90 days trading horizon ENF Technology Co is expected to generate 1.53 times more return on investment than Hyundai. However, ENF Technology is 1.53 times more volatile than Hyundai Motor. It trades about 0.2 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.03 per unit of risk. If you would invest 1,603,000 in ENF Technology Co on September 20, 2024 and sell it today you would earn a total of 215,000 from holding ENF Technology Co or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ENF Technology Co vs. Hyundai Motor
Performance |
| Timeline |
| ENF Technology |
| Hyundai Motor |
ENF Technology and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENF Technology and Hyundai
The main advantage of trading using opposite ENF Technology and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENF Technology position performs unexpectedly, Hyundai 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 will offset losses from the drop in Hyundai's long position.| ENF Technology vs. Dongjin Semichem Co | ENF Technology vs. SS TECH | ENF Technology vs. Tokai Carbon Korea | ENF Technology vs. Soulbrain Holdings Co |
| Hyundai vs. E Investment Development | Hyundai vs. KTB Investment Securities | Hyundai vs. Woori Technology Investment | Hyundai vs. Kukil Metal Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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