Correlation Between Hyundai Steel and OCI

Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and OCI 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 Steel and OCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hyundai Steel and OCI Co, you can compare the effects of market volatilities on Hyundai Steel and OCI 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 Steel with a short position of OCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and OCI.

Diversification Opportunities for Hyundai Steel and OCI

0.44

Correlation Coefficient

Hyundai Steel  OCI

Very weak diversification

The 3 months correlation between Hyundai and OCI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co and Hyundai Steel 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 Steel are associated (or correlated) with OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and OCI go up and down completely randomly.

Pair Corralation between Hyundai Steel and OCI

Assuming the 90 days trading horizon Hyundai Steel is expected to generate 0.82 times more return on investment than OCI. However, Hyundai Steel is 1.22 times less risky than OCI. It trades about 0.13 of its potential returns per unit of risk. OCI Co is currently generating about 0.09 per unit of risk. If you would invest  2,047,276  in Hyundai Steel on December 30, 2024 and sell it today you would earn a total of  532,724  from holding Hyundai Steel or generate 26.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hyundai Steel  vs.  OCI Co

Hyundai Steel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

OCI Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OCI Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, OCI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai Steel and OCI

The main advantage of trading using opposite Hyundai Steel and OCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, OCI 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 OCI will offset losses from the drop in OCI's long position.

The idea behind Hyundai Steel and OCI Co 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.