Correlation Between Daewoo SBI and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Hyundai Rotem 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 Daewoo SBI and Hyundai Rotem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Hyundai Rotem Co, you can compare the effects of market volatilities on Daewoo SBI and Hyundai Rotem 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 Daewoo SBI with a short position of Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Hyundai Rotem.
Diversification Opportunities for Daewoo SBI and Hyundai Rotem
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Hyundai is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Hyundai Rotem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Rotem has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Daewoo SBI and Hyundai Rotem
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 0.43 times more return on investment than Hyundai Rotem. However, Daewoo SBI SPAC is 2.32 times less risky than Hyundai Rotem. It trades about -0.3 of its potential returns per unit of risk. Hyundai Rotem Co is currently generating about -0.21 per unit of risk. If you would invest 264,000 in Daewoo SBI SPAC on September 4, 2024 and sell it today you would lose (30,500) from holding Daewoo SBI SPAC or give up 11.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Hyundai Rotem Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Hyundai Rotem |
Daewoo SBI and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Hyundai Rotem
The main advantage of trading using opposite Daewoo SBI and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Hyundai Rotem 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 Rotem will offset losses from the drop in Hyundai Rotem's long position.| Daewoo SBI vs. InnoTherapy | Daewoo SBI vs. Ilji Technology Co | Daewoo SBI vs. Global Standard Technology | Daewoo SBI vs. Cots Technology Co |
| Hyundai Rotem vs. Hyosung Chemical Corp | Hyundai Rotem vs. Kyung In Synthetic Corp | Hyundai Rotem vs. JC Chemical Co | Hyundai Rotem vs. Sung Bo Chemicals |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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