Correlation Between Hyundai Heavy and Formetal
Can any of the company-specific risk be diversified away by investing in both Hyundai Heavy 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 Heavy and Formetal 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 Formetal Co, you can compare the effects of market volatilities on Hyundai Heavy 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 Heavy with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Formetal.
Diversification Opportunities for Hyundai Heavy and Formetal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Formetal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 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 Heavy i.e., Hyundai Heavy and Formetal go up and down completely randomly.
Pair Corralation between Hyundai Heavy and Formetal
Assuming the 90 days trading horizon Hyundai Heavy is expected to generate 5.52 times less return on investment than Formetal. But when comparing it to its historical volatility, Hyundai Heavy Industries is 1.74 times less risky than Formetal. It trades about 0.12 of its potential returns per unit of risk. Formetal Co is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 289,139 in Formetal Co on October 25, 2024 and sell it today you would earn a total of 90,361 from holding Formetal Co or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Heavy Industries vs. Formetal Co
Performance |
| Timeline |
| Hyundai Heavy Industries |
| Formetal |
Hyundai Heavy and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Heavy and Formetal
The main advantage of trading using opposite Hyundai Heavy and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Heavy 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 Heavy vs. Formetal Co | Hyundai Heavy vs. Shinsegae Food | Hyundai Heavy vs. Songwon Industrial Co | Hyundai Heavy vs. Namhwa Industrial Co |
| Formetal vs. Sangsangin Investment Securities | Formetal vs. TS Investment Corp | Formetal vs. Daeduck Electronics Co | Formetal vs. DSC Investment |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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