Correlation Between Formetal and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Formetal and Hyundai Heavy 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 Formetal and Hyundai Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Hyundai Heavy Industries, you can compare the effects of market volatilities on Formetal and Hyundai Heavy 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 Formetal with a short position of Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Hyundai Heavy.
Diversification Opportunities for Formetal and Hyundai Heavy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formetal and Hyundai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries and Formetal 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 Formetal Co are associated (or correlated) with Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Formetal i.e., Formetal and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Formetal and Hyundai Heavy
Assuming the 90 days trading horizon Formetal Co is expected to generate 2.98 times more return on investment than Hyundai Heavy. However, Formetal is 2.98 times more volatile than Hyundai Heavy Industries. It trades about 0.24 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about -0.06 per unit of risk. If you would invest 355,500 in Formetal Co on November 4, 2024 and sell it today you would earn a total of 51,000 from holding Formetal Co or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Formetal |
| Hyundai Heavy Industries |
Formetal and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Hyundai Heavy
The main advantage of trading using opposite Formetal and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Hyundai Heavy 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 Heavy will offset losses from the drop in Hyundai Heavy's long position.| Formetal vs. Korea Electronic Certification | Formetal vs. Samyang Foods Co | Formetal vs. Cuckoo Electronics Co | Formetal vs. Vissem Electronics Co |
| Hyundai Heavy vs. Lotte Data Communication | Hyundai Heavy vs. Dongbang Transport Logistics | Hyundai Heavy vs. BGF Retail Co | Hyundai Heavy vs. Sung Bo Chemicals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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