Correlation Between RF Materials and Hyundai
Can any of the company-specific risk be diversified away by investing in both RF Materials and Hyundai 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 RF Materials and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Materials Co and Hyundai Motor Co, you can compare the effects of market volatilities on RF Materials and Hyundai 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 RF Materials with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and Hyundai.
Diversification Opportunities for RF Materials and Hyundai
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 327260 and Hyundai is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and RF Materials 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 RF Materials Co are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of RF Materials i.e., RF Materials and Hyundai go up and down completely randomly.
Pair Corralation between RF Materials and Hyundai
Assuming the 90 days trading horizon RF Materials Co is expected to generate 2.67 times more return on investment than Hyundai. However, RF Materials is 2.67 times more volatile than Hyundai Motor Co. It trades about 0.03 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.01 per unit of risk. If you would invest 562,000 in RF Materials Co on December 4, 2024 and sell it today you would earn a total of 4,000 from holding RF Materials Co or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RF Materials Co vs. Hyundai Motor Co
Performance |
| Timeline |
| RF Materials |
| Hyundai Motor |
RF Materials and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and Hyundai
The main advantage of trading using opposite RF Materials and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, Hyundai 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 will offset losses from the drop in Hyundai's long position.| RF Materials vs. Kg Chemical | RF Materials vs. Korea Petro Chemical | RF Materials vs. SK Telecom Co | RF Materials vs. Daejung Chemicals Metals |
| Hyundai vs. Sangsin Energy Display | Hyundai vs. Dongbang Ship Machinery | Hyundai vs. Dongbang Transport Logistics | Hyundai vs. Dongwoo Farm To |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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