Correlation Between Hyosung Advanced and National Plastic
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and National Plastic 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 Hyosung Advanced and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and National Plastic Co, you can compare the effects of market volatilities on Hyosung Advanced and National Plastic 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 Hyosung Advanced with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and National Plastic.
Diversification Opportunities for Hyosung Advanced and National Plastic
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyosung and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and Hyosung Advanced 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 Hyosung Advanced Materials are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and National Plastic go up and down completely randomly.
Pair Corralation between Hyosung Advanced and National Plastic
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the National Plastic. In addition to that, Hyosung Advanced is 2.19 times more volatile than National Plastic Co. It trades about -0.55 of its total potential returns per unit of risk. National Plastic Co is currently generating about -0.11 per unit of volatility. If you would invest 271,500 in National Plastic Co on August 29, 2024 and sell it today you would lose (10,500) from holding National Plastic Co or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. National Plastic Co
Performance |
| Timeline |
| Hyosung Advanced Mat |
| National Plastic |
Hyosung Advanced and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and National Plastic
The main advantage of trading using opposite Hyosung Advanced and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Mirae Asset Daewoo | Hyosung Advanced vs. UNISEM Co |
| National Plastic vs. Hanjinkal | National Plastic vs. Samsung Heavy Industries | National Plastic vs. JYP Entertainment |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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