Correlation Between Lion Chemtech and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech 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 Lion Chemtech and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Hyundai Engineering Construction, you can compare the effects of market volatilities on Lion Chemtech 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 Lion Chemtech with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Hyundai Engineering.
Diversification Opportunities for Lion Chemtech and Hyundai Engineering
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Hyundai is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Lion Chemtech 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 Lion Chemtech Co 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 Lion Chemtech i.e., Lion Chemtech and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Lion Chemtech and Hyundai Engineering
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the Hyundai Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Lion Chemtech Co is 1.89 times less risky than Hyundai Engineering. The stock trades about -0.15 of its potential returns per unit of risk. The Hyundai Engineering Construction is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,590,000 in Hyundai Engineering Construction on November 6, 2024 and sell it today you would earn a total of 490,000 from holding Hyundai Engineering Construction or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Lion Chemtech |
| Hyundai Engineering |
Lion Chemtech and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Hyundai Engineering
The main advantage of trading using opposite Lion Chemtech and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech 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.| Lion Chemtech vs. ENERGYMACHINERY KOREA CoLtd | Lion Chemtech vs. Automobile Pc | Lion Chemtech vs. Seohee Construction Co | Lion Chemtech vs. Sangsin Energy Display |
| Hyundai Engineering vs. SCI Information Service | Hyundai Engineering vs. LB Investment | Hyundai Engineering vs. Samsung Publishing Co | Hyundai Engineering vs. Chorokbaem Healthcare 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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