Correlation Between Hana Materials and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Hana Materials and Hyundai Engineering 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 Hana Materials and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Hyundai Engineering Plastics, you can compare the effects of market volatilities on Hana Materials and Hyundai Engineering 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 Hana Materials with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Hyundai Engineering.
Diversification Opportunities for Hana Materials and Hyundai Engineering
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hana and Hyundai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Hana Materials 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 Hana Materials are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Hana Materials i.e., Hana Materials and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Hana Materials and Hyundai Engineering
Assuming the 90 days trading horizon Hana Materials is expected to under-perform the Hyundai Engineering. In addition to that, Hana Materials is 1.71 times more volatile than Hyundai Engineering Plastics. It trades about -0.31 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about -0.1 per unit of volatility. If you would invest 386,000 in Hyundai Engineering Plastics on August 28, 2024 and sell it today you would lose (14,000) from holding Hyundai Engineering Plastics or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Materials vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| Hana Materials |
| Hyundai Engineering |
Hana Materials and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and Hyundai Engineering
The main advantage of trading using opposite Hana Materials and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, Hyundai Engineering 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 Engineering will offset losses from the drop in Hyundai Engineering's long position.| Hana Materials vs. SK Hynix | Hana Materials vs. People Technology | Hana Materials vs. SIMMTECH Co | Hana Materials vs. Haesung DS Co |
| Hyundai Engineering vs. AptaBio Therapeutics | Hyundai Engineering vs. Daewoo SBI SPAC | Hyundai Engineering vs. Dream Security co | Hyundai Engineering 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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