Correlation Between CU Tech and Hyosung Chemical
Can any of the company-specific risk be diversified away by investing in both CU Tech 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 CU Tech and Hyosung Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Tech Corp and Hyosung Chemical Corp, you can compare the effects of market volatilities on CU Tech 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 CU Tech with a short position of Hyosung Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Tech and Hyosung Chemical.
Diversification Opportunities for CU Tech and Hyosung Chemical
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 376290 and Hyosung is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp 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 CU Tech 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 CU Tech Corp 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 CU Tech i.e., CU Tech and Hyosung Chemical go up and down completely randomly.
Pair Corralation between CU Tech and Hyosung Chemical
Assuming the 90 days trading horizon CU Tech Corp is expected to generate 0.61 times more return on investment than Hyosung Chemical. However, CU Tech Corp is 1.63 times less risky than Hyosung Chemical. It trades about -0.16 of its potential returns per unit of risk. Hyosung Chemical Corp is currently generating about -0.5 per unit of risk. If you would invest 315,500 in CU Tech Corp on August 29, 2024 and sell it today you would lose (17,500) from holding CU Tech Corp or give up 5.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Tech Corp vs. Hyosung Chemical Corp
Performance |
| Timeline |
| CU Tech Corp |
| Hyosung Chemical Corp |
CU Tech and Hyosung Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Tech and Hyosung Chemical
The main advantage of trading using opposite CU Tech and Hyosung Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Tech 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.The idea behind CU Tech Corp and Hyosung Chemical Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hyosung Chemical vs. Nh Investment And | Hyosung Chemical vs. Seoyon Topmetal Co | Hyosung Chemical vs. Sangsangin Investment Securities | Hyosung Chemical vs. MetaLabs Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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