Correlation Between Daejung Chemicals and Hyundai Industrial
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Hyundai Industrial 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 Industrial 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 Industrial Co, you can compare the effects of market volatilities on Daejung Chemicals and Hyundai Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Hyundai Industrial.
Diversification Opportunities for Daejung Chemicals and Hyundai Industrial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daejung and Hyundai is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Hyundai Industrial go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Hyundai Industrial
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Hyundai Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.42 times less risky than Hyundai Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Hyundai Industrial Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 849,536 in Hyundai Industrial Co on January 26, 2025 and sell it today you would lose (238,536) from holding Hyundai Industrial Co or give up 28.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Hyundai Industrial Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Hyundai Industrial |
Daejung Chemicals and Hyundai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Hyundai Industrial
The main advantage of trading using opposite Daejung Chemicals and Hyundai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Hyundai Industrial 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 Industrial will offset losses from the drop in Hyundai Industrial's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
| Hyundai Industrial vs. AptaBio Therapeutics | Hyundai Industrial vs. Daewoo SBI SPAC | Hyundai Industrial vs. Dream Security co | Hyundai Industrial vs. Microfriend |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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