Correlation Between Hyundai Mobis and Kyeryong Construction

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

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

Diversification Opportunities for Hyundai Mobis and Kyeryong Construction

0.22

Correlation Coefficient

Hyundai Mobis  Kyeryong Construction

Modest diversification

The 3 months correlation between Hyundai and Kyeryong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Mobis and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong Construction and Hyundai Mobis 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 Mobis are associated (or correlated) with Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Hyundai Mobis i.e., Hyundai Mobis and Kyeryong Construction go up and down completely randomly.

Pair Corralation between Hyundai Mobis and Kyeryong Construction

Assuming the 90 days trading horizon Hyundai Mobis is expected to generate 1.31 times more return on investment than Kyeryong Construction. However, Hyundai Mobis is 1.31 times more volatile than Kyeryong Construction Industrial. It trades about 0.04 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about 0.02 per unit of risk. If you would invest  21,772,000  in Hyundai Mobis on December 7, 2024 and sell it today you would earn a total of  3,828,000  from holding Hyundai Mobis or generate 17.58% return on investment over 90 days.

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

Hyundai Mobis  vs.  Kyeryong Construction Industri

Hyundai Mobis

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Mobis are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Mobis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kyeryong Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kyeryong Construction Industrial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kyeryong Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai Mobis and Kyeryong Construction

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

The idea behind Hyundai Mobis and Kyeryong Construction Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.