Correlation Between LB Investment and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both LB Investment and Hyundai Engineering 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 LB Investment and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and Hyundai Engineering Plastics, you can compare the effects of market volatilities on LB Investment and Hyundai Engineering 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 LB Investment with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and Hyundai Engineering.
Diversification Opportunities for LB Investment and Hyundai Engineering
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 309960 and Hyundai is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and LB Investment 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 LB Investment are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of LB Investment i.e., LB Investment and Hyundai Engineering go up and down completely randomly.
Pair Corralation between LB Investment and Hyundai Engineering
Assuming the 90 days trading horizon LB Investment is expected to under-perform the Hyundai Engineering. In addition to that, LB Investment is 1.44 times more volatile than Hyundai Engineering Plastics. It trades about -0.13 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about -0.09 per unit of volatility. If you would invest 380,500 in Hyundai Engineering Plastics on October 11, 2024 and sell it today you would lose (29,500) from holding Hyundai Engineering Plastics or give up 7.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Investment vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| LB Investment |
| Hyundai Engineering |
LB Investment and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and Hyundai Engineering
The main advantage of trading using opposite LB Investment and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| LB Investment vs. Moadata Co | LB Investment vs. Daou Data Corp | LB Investment vs. Samick Musical Instruments | LB Investment vs. CU Medical Systems |
| Hyundai Engineering vs. Camus Engineering Construction | Hyundai Engineering vs. GS Engineering Construction | Hyundai Engineering vs. Air Busan Co | Hyundai Engineering vs. Dongbang Ship Machinery |
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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