Correlation Between Hyundai Green and KPX Green
Can any of the company-specific risk be diversified away by investing in both Hyundai Green and KPX Green 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 Green and KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Green Food and KPX Green Chemical, you can compare the effects of market volatilities on Hyundai Green and KPX Green 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 Green with a short position of KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Green and KPX Green.
Diversification Opportunities for Hyundai Green and KPX Green
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyundai and KPX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Green Food and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical and Hyundai Green 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 Green Food are associated (or correlated) with KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Hyundai Green i.e., Hyundai Green and KPX Green go up and down completely randomly.
Pair Corralation between Hyundai Green and KPX Green
Assuming the 90 days trading horizon Hyundai Green Food is expected to generate 0.33 times more return on investment than KPX Green. However, Hyundai Green Food is 3.0 times less risky than KPX Green. It trades about -0.12 of its potential returns per unit of risk. KPX Green Chemical is currently generating about -0.13 per unit of risk. If you would invest 1,446,000 in Hyundai Green Food on November 7, 2024 and sell it today you would lose (46,000) from holding Hyundai Green Food or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Green Food vs. KPX Green Chemical
Performance |
| Timeline |
| Hyundai Green Food |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| KPX Green Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Hyundai Green and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Green and KPX Green
The main advantage of trading using opposite Hyundai Green and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Green position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Hyundai Green vs. Samsung Electronics Co | Hyundai Green vs. SK Hynix | Hyundai Green vs. LG Chem | Hyundai Green vs. Samsung SDI |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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