Correlation Between Hyundai Heavy and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Hyundai Heavy and Nam Hwa 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 Heavy and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Heavy Industries and Nam Hwa Construction, you can compare the effects of market volatilities on Hyundai Heavy and Nam Hwa 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 Heavy with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Nam Hwa.
Diversification Opportunities for Hyundai Heavy and Nam Hwa
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hyundai and Nam is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Hyundai Heavy 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 Heavy Industries are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Hyundai Heavy i.e., Hyundai Heavy and Nam Hwa go up and down completely randomly.
Pair Corralation between Hyundai Heavy and Nam Hwa
Assuming the 90 days trading horizon Hyundai Heavy Industries is expected to generate 1.27 times more return on investment than Nam Hwa. However, Hyundai Heavy is 1.27 times more volatile than Nam Hwa Construction. It trades about 0.12 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.08 per unit of risk. If you would invest 7,850,000 in Hyundai Heavy Industries on October 14, 2024 and sell it today you would earn a total of 410,000 from holding Hyundai Heavy Industries or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Heavy Industries vs. Nam Hwa Construction
Performance |
| Timeline |
| Hyundai Heavy Industries |
| Nam Hwa Construction |
Hyundai Heavy and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Heavy and Nam Hwa
The main advantage of trading using opposite Hyundai Heavy and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Heavy position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Hyundai Heavy vs. Digital Imaging Technology | Hyundai Heavy vs. Eagle Veterinary Technology | Hyundai Heavy vs. Dongbang Transport Logistics | Hyundai Heavy vs. Dong A Steel Technology |
| Nam Hwa vs. Seohee Construction Co | Nam Hwa vs. SEOJEON ELECTRIC MACHINERY | Nam Hwa vs. Hanmi Semiconductor Co | Nam Hwa vs. Semyung Electric Machinery |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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