Correlation Between Hyosung Advanced and Ecopro BM
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Ecopro BM 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 Ecopro BM 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 Ecopro BM Co, you can compare the effects of market volatilities on Hyosung Advanced and Ecopro BM 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 Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Ecopro BM.
Diversification Opportunities for Hyosung Advanced and Ecopro BM
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyosung and Ecopro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM 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 Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Ecopro BM go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Ecopro BM
Assuming the 90 days trading horizon Hyosung Advanced is expected to generate 6.88 times less return on investment than Ecopro BM. But when comparing it to its historical volatility, Hyosung Advanced Materials is 2.42 times less risky than Ecopro BM. It trades about 0.09 of its potential returns per unit of risk. Ecopro BM Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,550,000 in Ecopro BM Co on November 2, 2024 and sell it today you would earn a total of 2,410,000 from holding Ecopro BM Co or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Ecopro BM Co
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Ecopro BM |
Hyosung Advanced and Ecopro BM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Ecopro BM
The main advantage of trading using opposite Hyosung Advanced and Ecopro BM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Ecopro BM 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 Ecopro BM will offset losses from the drop in Ecopro BM's long position.| Hyosung Advanced vs. Pureun Mutual Savings | Hyosung Advanced vs. SBI Investment KOREA | Hyosung Advanced vs. Worldex Industry Trading | Hyosung Advanced vs. Insung Information Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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