Correlation Between TOPMATERIAL and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both TOPMATERIAL 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 TOPMATERIAL and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPMATERIAL LTD and Hyundai Engineering Plastics, you can compare the effects of market volatilities on TOPMATERIAL 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 TOPMATERIAL with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPMATERIAL and Hyundai Engineering.
Diversification Opportunities for TOPMATERIAL and Hyundai Engineering
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOPMATERIAL and Hyundai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TOPMATERIAL LTD and Hyundai Engineering Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and TOPMATERIAL 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 TOPMATERIAL LTD 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 TOPMATERIAL i.e., TOPMATERIAL and Hyundai Engineering go up and down completely randomly.
Pair Corralation between TOPMATERIAL and Hyundai Engineering
Assuming the 90 days trading horizon TOPMATERIAL LTD is expected to under-perform the Hyundai Engineering. In addition to that, TOPMATERIAL is 2.14 times more volatile than Hyundai Engineering Plastics. It trades about -0.25 of its total potential returns per unit of risk. Hyundai Engineering Plastics is currently generating about -0.15 per unit of volatility. If you would invest 385,500 in Hyundai Engineering Plastics on September 1, 2024 and sell it today you would lose (21,500) from holding Hyundai Engineering Plastics or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPMATERIAL LTD vs. Hyundai Engineering Plastics
Performance |
| Timeline |
| TOPMATERIAL LTD |
| Hyundai Engineering |
TOPMATERIAL and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPMATERIAL and Hyundai Engineering
The main advantage of trading using opposite TOPMATERIAL and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPMATERIAL 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.| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
| Hyundai Engineering vs. ABCO Electronics Co | Hyundai Engineering vs. Daiyang Metal Co | Hyundai Engineering vs. Daejung Chemicals Metals | Hyundai Engineering vs. DAEDUCK ELECTRONICS CoLtd |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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