Correlation Between Miwon Chemical and Hyundai
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical 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 Miwon Chemical and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Hyundai Motor Co, you can compare the effects of market volatilities on Miwon Chemical 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 Miwon Chemical with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Hyundai.
Diversification Opportunities for Miwon Chemical and Hyundai
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Miwon and Hyundai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Miwon Chemical 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 Miwon Chemical 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 Miwon Chemical i.e., Miwon Chemical and Hyundai go up and down completely randomly.
Pair Corralation between Miwon Chemical and Hyundai
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 2.4 times less return on investment than Hyundai. But when comparing it to its historical volatility, Miwon Chemical is 1.99 times less risky than Hyundai. It trades about 0.07 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,471,439 in Hyundai Motor Co on October 29, 2024 and sell it today you would earn a total of 7,638,561 from holding Hyundai Motor Co or generate 90.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Hyundai Motor Co
Performance |
| Timeline |
| Miwon Chemical |
| Hyundai Motor |
Miwon Chemical and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Hyundai
The main advantage of trading using opposite Miwon Chemical and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical 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.| Miwon Chemical vs. LB Investment | Miwon Chemical vs. E Investment Development | Miwon Chemical vs. NH Investment Securities | Miwon Chemical vs. Coloray International Investment |
| Hyundai vs. Innowireless Co | Hyundai vs. LG Household Healthcare | Hyundai vs. SEOWONINTECHCoLtd | Hyundai vs. FNSTech 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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