Correlation Between KakaoBank Corp and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp 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 KakaoBank Corp and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Hyundai Engineering Plastics, you can compare the effects of market volatilities on KakaoBank Corp 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 KakaoBank Corp with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Hyundai Engineering.
Diversification Opportunities for KakaoBank Corp and Hyundai Engineering
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Hyundai is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp i.e., KakaoBank Corp and Hyundai Engineering go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Hyundai Engineering
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 1.51 times more return on investment than Hyundai Engineering. However, KakaoBank Corp is 1.51 times more volatile than Hyundai Engineering Plastics. It trades about 0.01 of its potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about 0.0 per unit of risk. If you would invest 2,510,000 in KakaoBank Corp on September 14, 2024 and sell it today you would lose (140,000) from holding KakaoBank Corp or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| KakaoBank Corp |
| Hyundai Engineering |
KakaoBank Corp and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Hyundai Engineering
The main advantage of trading using opposite KakaoBank Corp and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp 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.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| Hyundai Engineering vs. Dongbu Insurance Co | Hyundai Engineering vs. Vissem Electronics Co | Hyundai Engineering vs. Hana Financial | Hyundai Engineering vs. KakaoBank Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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