Correlation Between Hyundai Industrial and Formetal
Can any of the company-specific risk be diversified away by investing in both Hyundai Industrial and Formetal 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 Hyundai Industrial and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Industrial Co and Formetal Co, you can compare the effects of market volatilities on Hyundai Industrial and Formetal 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 Hyundai Industrial with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Industrial and Formetal.
Diversification Opportunities for Hyundai Industrial and Formetal
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hyundai and Formetal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Industrial Co and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and Hyundai Industrial 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 Hyundai Industrial Co are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Hyundai Industrial i.e., Hyundai Industrial and Formetal go up and down completely randomly.
Pair Corralation between Hyundai Industrial and Formetal
Assuming the 90 days trading horizon Hyundai Industrial is expected to generate 3.75 times less return on investment than Formetal. In addition to that, Hyundai Industrial is 1.09 times more volatile than Formetal Co. It trades about 0.0 of its total potential returns per unit of risk. Formetal Co is currently generating about 0.01 per unit of volatility. If you would invest 362,031 in Formetal Co on October 14, 2024 and sell it today you would lose (10,031) from holding Formetal Co or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Industrial Co vs. Formetal Co
Performance |
| Timeline |
| Hyundai Industrial |
| Formetal |
Hyundai Industrial and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Industrial and Formetal
The main advantage of trading using opposite Hyundai Industrial and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Industrial position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Hyundai Industrial vs. Cube Entertainment | Hyundai Industrial vs. SM Entertainment Co | Hyundai Industrial vs. DONGKUK TED METAL | Hyundai Industrial vs. Heungkuk Metaltech CoLtd |
| Formetal vs. Dongil Metal Co | Formetal vs. Cheryong Industrial CoLtd | Formetal vs. Industrial Bank | Formetal vs. Hyundai Industrial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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