Correlation Between Daejung Chemicals and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Hyundai Home 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 Daejung Chemicals and Hyundai Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Hyundai Home Shopping, you can compare the effects of market volatilities on Daejung Chemicals and Hyundai Home 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 Daejung Chemicals with a short position of Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Hyundai Home.
Diversification Opportunities for Daejung Chemicals and Hyundai Home
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Hyundai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping and Daejung Chemicals 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 Daejung Chemicals Metals are associated (or correlated) with Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Hyundai Home go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Hyundai Home
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Hyundai Home. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.26 times less risky than Hyundai Home. The stock trades about -0.05 of its potential returns per unit of risk. The Hyundai Home Shopping is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,135,525 in Hyundai Home Shopping on September 28, 2024 and sell it today you would earn a total of 614,475 from holding Hyundai Home Shopping or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Hyundai Home Shopping
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Hyundai Home Shopping |
Daejung Chemicals and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Hyundai Home
The main advantage of trading using opposite Daejung Chemicals and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Hyundai Home 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 Home will offset losses from the drop in Hyundai Home's long position.| Daejung Chemicals vs. Keyang Electric Machinery | Daejung Chemicals vs. Air Busan Co | Daejung Chemicals vs. ITM Semiconductor Co | Daejung Chemicals vs. Cloud Air CoLtd |
| Hyundai Home vs. AptaBio Therapeutics | Hyundai Home vs. Wonbang Tech Co | Hyundai Home vs. Busan Industrial Co | Hyundai Home vs. Busan Ind |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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