Correlation Between Hyosung Advanced and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Seojin Automotive 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 Seojin Automotive 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 Seojin Automotive CoLtd, you can compare the effects of market volatilities on Hyosung Advanced and Seojin Automotive 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 Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Seojin Automotive.
Diversification Opportunities for Hyosung Advanced and Seojin Automotive
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyosung and Seojin is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd 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 Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Seojin Automotive go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Seojin Automotive
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Seojin Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Hyosung Advanced Materials is 1.14 times less risky than Seojin Automotive. The stock trades about -0.05 of its potential returns per unit of risk. The Seojin Automotive CoLtd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 323,000 in Seojin Automotive CoLtd on December 4, 2024 and sell it today you would lose (137,700) from holding Seojin Automotive CoLtd or give up 42.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Seojin Automotive CoLtd
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Seojin Automotive CoLtd |
Hyosung Advanced and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Seojin Automotive
The main advantage of trading using opposite Hyosung Advanced and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive's long position.| Hyosung Advanced vs. Hanmi Semiconductor Co | Hyosung Advanced vs. GS Retail Co | Hyosung Advanced vs. LG Household Healthcare | Hyosung Advanced vs. Sempio Foods Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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