Correlation Between Hyundai Steel and SAMRYOONG CoLtd

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

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

Diversification Opportunities for Hyundai Steel and SAMRYOONG CoLtd

0.91

Correlation Coefficient

Hyundai Steel  SAMRYOONG CoLtd

Almost no diversification

The 3 months correlation between Hyundai and SAMRYOONG is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and SAMRYOONG CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMRYOONG CoLtd 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 SAMRYOONG CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMRYOONG CoLtd has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and SAMRYOONG CoLtd go up and down completely randomly.

Pair Corralation between Hyundai Steel and SAMRYOONG CoLtd

Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the SAMRYOONG CoLtd. In addition to that, Hyundai Steel is 1.89 times more volatile than SAMRYOONG CoLtd. It trades about -0.15 of its total potential returns per unit of risk. SAMRYOONG CoLtd is currently generating about -0.11 per unit of volatility. If you would invest  385,500  in SAMRYOONG CoLtd on September 3, 2024 and sell it today you would lose (30,000) from holding SAMRYOONG CoLtd or give up 7.78% of portfolio value over 90 days.

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

Hyundai Steel  vs.  SAMRYOONG CoLtd

Hyundai Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SAMRYOONG CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMRYOONG CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hyundai Steel and SAMRYOONG CoLtd

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

The idea behind Hyundai Steel and SAMRYOONG CoLtd 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.