Correlation Between Dongwon Ind and Hyundai Engineering

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Can any of the company-specific risk be diversified away by investing in both Dongwon Ind and Hyundai 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 Dongwon Ind and Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon Ind and Hyundai Engineering Construction, you can compare the effects of market volatilities on Dongwon Ind and Hyundai 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 Dongwon Ind with a short position of Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon Ind and Hyundai Engineering.

Diversification Opportunities for Dongwon Ind and Hyundai Engineering

DongwonHyundaiDiversified AwayDongwonHyundaiDiversified Away100%
-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Dongwon and Hyundai is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon Ind and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Dongwon Ind 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 Dongwon Ind are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Dongwon Ind i.e., Dongwon Ind and Hyundai Engineering go up and down completely randomly.

Pair Corralation between Dongwon Ind and Hyundai Engineering

Assuming the 90 days trading horizon Dongwon Ind is expected to generate 1.01 times less return on investment than Hyundai Engineering. But when comparing it to its historical volatility, Dongwon Ind is 1.42 times less risky than Hyundai Engineering. It trades about 0.11 of its potential returns per unit of risk. Hyundai Engineering Construction is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,855,000  in Hyundai Engineering Construction on October 27, 2024 and sell it today you would earn a total of  295,000  from holding Hyundai Engineering Construction or generate 10.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dongwon Ind  vs.  Hyundai Engineering Constructi

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -1001020
JavaScript chart by amCharts 3.21.15006040 000720
       Timeline  
Dongwon Ind 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dongwon Ind are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongwon Ind may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan29,00030,00031,00032,00033,00034,00035,00036,00037,00038,000
Hyundai Engineering 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Engineering Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan24,00025,00026,00027,00028,00029,00030,00031,000

Dongwon Ind and Hyundai Engineering Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.28-3.95-2.63-1.30.02361.412.834.245.65 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15006040 000720
       Returns  

Pair Trading with Dongwon Ind and Hyundai Engineering

The main advantage of trading using opposite Dongwon Ind and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon Ind position performs unexpectedly, Hyundai 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.
The idea behind Dongwon Ind and Hyundai Engineering Construction 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.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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