Correlation Between Hyundai Heavy and Hyosung Chemical
Can any of the company-specific risk be diversified away by investing in both Hyundai Heavy and Hyosung Chemical 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 Hyundai Heavy and Hyosung Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Heavy Industries and Hyosung Chemical Corp, you can compare the effects of market volatilities on Hyundai Heavy and Hyosung Chemical 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 Hyundai Heavy with a short position of Hyosung Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Hyosung Chemical.
Diversification Opportunities for Hyundai Heavy and Hyosung Chemical
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Hyosung is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Hyosung Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Chemical Corp and Hyundai Heavy 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 Hyundai Heavy Industries are associated (or correlated) with Hyosung Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Chemical Corp has no effect on the direction of Hyundai Heavy i.e., Hyundai Heavy and Hyosung Chemical go up and down completely randomly.
Pair Corralation between Hyundai Heavy and Hyosung Chemical
Assuming the 90 days trading horizon Hyundai Heavy is expected to generate 1.64 times less return on investment than Hyosung Chemical. But when comparing it to its historical volatility, Hyundai Heavy Industries is 2.01 times less risky than Hyosung Chemical. It trades about 0.12 of its potential returns per unit of risk. Hyosung Chemical Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,580,000 in Hyosung Chemical Corp on September 12, 2024 and sell it today you would earn a total of 425,000 from holding Hyosung Chemical Corp or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Heavy Industries vs. Hyosung Chemical Corp
Performance |
| Timeline |
| Hyundai Heavy Industries |
| Hyosung Chemical Corp |
Hyundai Heavy and Hyosung Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Heavy and Hyosung Chemical
The main advantage of trading using opposite Hyundai Heavy and Hyosung Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Heavy position performs unexpectedly, Hyosung Chemical 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 Hyosung Chemical will offset losses from the drop in Hyosung Chemical's long position.| Hyundai Heavy vs. Daewoo Shipbuilding | Hyundai Heavy vs. HJ ShipBuilding Construction | Hyundai Heavy vs. Busan Industrial Co | Hyundai Heavy vs. Busan Ind |
| Hyosung Chemical vs. LG Chem | Hyosung Chemical vs. Chunbo Co | Hyosung Chemical vs. DukSan Neolux CoLtd | Hyosung Chemical vs. LIG ES SPAC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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