Correlation Between Samyoung Electronics and Hyundai Steel

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

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

Diversification Opportunities for Samyoung Electronics and Hyundai Steel

-0.25

Correlation Coefficient

Samyoung Electronics  Hyundai Steel

Very good diversification

The 3 months correlation between Samyoung and Hyundai is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samyoung Electronics Co and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and Samyoung Electronics 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 Samyoung Electronics Co are associated (or correlated) with Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of Samyoung Electronics i.e., Samyoung Electronics and Hyundai Steel go up and down completely randomly.

Pair Corralation between Samyoung Electronics and Hyundai Steel

Assuming the 90 days trading horizon Samyoung Electronics Co is expected to generate 0.41 times more return on investment than Hyundai Steel. However, Samyoung Electronics Co is 2.47 times less risky than Hyundai Steel. It trades about 0.13 of its potential returns per unit of risk. Hyundai Steel is currently generating about -0.05 per unit of risk. If you would invest  931,343  in Samyoung Electronics Co on October 26, 2024 and sell it today you would earn a total of  91,657  from holding Samyoung Electronics Co or generate 9.84% return on investment over 90 days.

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

Samyoung Electronics Co  vs.  Hyundai Steel

Samyoung Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samyoung Electronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyoung Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 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 Samyoung Electronics and Hyundai Steel

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

The idea behind Samyoung Electronics Co and Hyundai Steel 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.