Correlation Between Hyundai and JUSUNG ENGINEERING

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

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

Diversification Opportunities for Hyundai and JUSUNG ENGINEERING

0.29

Correlation Coefficient

Hyundai  JUSUNG ENGINEERING

Modest diversification

The 3 months correlation between Hyundai and JUSUNG is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and JUSUNG ENGINEERING Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JUSUNG ENGINEERING and Hyundai 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 Motor Co are associated (or correlated) with JUSUNG ENGINEERING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JUSUNG ENGINEERING has no effect on the direction of Hyundai i.e., Hyundai and JUSUNG ENGINEERING go up and down completely randomly.

Pair Corralation between Hyundai and JUSUNG ENGINEERING

Assuming the 90 days trading horizon Hyundai is expected to generate 109.48 times less return on investment than JUSUNG ENGINEERING. But when comparing it to its historical volatility, Hyundai Motor Co is 2.5 times less risky than JUSUNG ENGINEERING. It trades about 0.0 of its potential returns per unit of risk. JUSUNG ENGINEERING Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,595,623  in JUSUNG ENGINEERING Co on December 2, 2024 and sell it today you would earn a total of  729,377  from holding JUSUNG ENGINEERING Co or generate 28.1% return on investment over 90 days.

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

Hyundai Motor Co  vs.  JUSUNG ENGINEERING Co

Hyundai Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyundai Motor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hyundai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JUSUNG ENGINEERING

Risk-Adjusted Performance

OK

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

Pair Trading with Hyundai and JUSUNG ENGINEERING

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

The idea behind Hyundai Motor Co and JUSUNG ENGINEERING 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.