Correlation Between Hyosung Advanced and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Iljin Materials 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 Iljin Materials 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 Iljin Materials Co, you can compare the effects of market volatilities on Hyosung Advanced and Iljin Materials 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 Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Iljin Materials.
Diversification Opportunities for Hyosung Advanced and Iljin Materials
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyosung and Iljin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials 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 Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Iljin Materials go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Iljin Materials
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Iljin Materials. But the stock apears to be less risky and, when comparing its historical volatility, Hyosung Advanced Materials is 1.21 times less risky than Iljin Materials. The stock trades about -0.26 of its potential returns per unit of risk. The Iljin Materials Co is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 3,610,000 in Iljin Materials Co on August 25, 2024 and sell it today you would lose (950,000) from holding Iljin Materials Co or give up 26.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Iljin Materials Co
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Iljin Materials |
Hyosung Advanced and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Iljin Materials
The main advantage of trading using opposite Hyosung Advanced and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Iljin Materials 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 Iljin Materials will offset losses from the drop in Iljin Materials' long position.| Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Mirae Asset Daewoo | Hyosung Advanced vs. UNISEM Co |
| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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