Correlation Between Hyundai Industrial and DRGEM
Can any of the company-specific risk be diversified away by investing in both Hyundai Industrial and DRGEM 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 DRGEM 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 DRGEM, you can compare the effects of market volatilities on Hyundai Industrial and DRGEM 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 DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Industrial and DRGEM.
Diversification Opportunities for Hyundai Industrial and DRGEM
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hyundai and DRGEM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Industrial Co and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM 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 DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Hyundai Industrial i.e., Hyundai Industrial and DRGEM go up and down completely randomly.
Pair Corralation between Hyundai Industrial and DRGEM
Assuming the 90 days trading horizon Hyundai Industrial Co is expected to generate 1.45 times more return on investment than DRGEM. However, Hyundai Industrial is 1.45 times more volatile than DRGEM. It trades about 0.01 of its potential returns per unit of risk. DRGEM is currently generating about -0.06 per unit of risk. If you would invest 615,213 in Hyundai Industrial Co on December 1, 2024 and sell it today you would lose (52,213) from holding Hyundai Industrial Co or give up 8.49% 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. DRGEM
Performance |
| Timeline |
| Hyundai Industrial |
| DRGEM |
Hyundai Industrial and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Industrial and DRGEM
The main advantage of trading using opposite Hyundai Industrial and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Industrial position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Hyundai Industrial vs. Aju IB Investment | Hyundai Industrial vs. KTB Investment Securities | Hyundai Industrial vs. Ssangyong Information Communication | Hyundai Industrial vs. Atinum Investment Co |
| DRGEM vs. GS Retail Co | DRGEM vs. Songwon Industrial Co | DRGEM vs. Jinro Distillers Co | DRGEM vs. PJ Metal 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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