Correlation Between LS Materials and Hyundai
Can any of the company-specific risk be diversified away by investing in both LS 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 LS Materials and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Hyundai Motor Co, you can compare the effects of market volatilities on LS 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 LS Materials with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Hyundai.
Diversification Opportunities for LS Materials and Hyundai
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 417200 and Hyundai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and LS 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 LS Materials 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 LS Materials i.e., LS Materials and Hyundai go up and down completely randomly.
Pair Corralation between LS Materials and Hyundai
Assuming the 90 days trading horizon LS Materials is expected to under-perform the Hyundai. In addition to that, LS Materials is 1.76 times more volatile than Hyundai Motor Co. It trades about -0.11 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.03 per unit of volatility. If you would invest 14,781,100 in Hyundai Motor Co on September 3, 2024 and sell it today you would earn a total of 918,900 from holding Hyundai Motor Co or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Hyundai Motor Co
Performance |
| Timeline |
| LS Materials |
| Hyundai Motor |
LS Materials and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Hyundai
The main advantage of trading using opposite LS Materials and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 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.| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials vs. SK Hynix |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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