Correlation Between Dongwon System and Hyundai Green

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

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

Diversification Opportunities for Dongwon System and Hyundai Green

-0.82

Correlation Coefficient

Dongwon System  Hyundai Green

Pay attention - limited upside

The 3 months correlation between Dongwon and Hyundai is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System and Hyundai Green Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Green Food and Dongwon System 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 System are associated (or correlated) with Hyundai Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Green Food has no effect on the direction of Dongwon System i.e., Dongwon System and Hyundai Green go up and down completely randomly.

Pair Corralation between Dongwon System and Hyundai Green

Assuming the 90 days trading horizon Dongwon System is expected to under-perform the Hyundai Green. In addition to that, Dongwon System is 1.31 times more volatile than Hyundai Green Food. It trades about -0.13 of its total potential returns per unit of risk. Hyundai Green Food is currently generating about 0.16 per unit of volatility. If you would invest  1,160,000  in Hyundai Green Food on October 25, 2024 and sell it today you would earn a total of  230,000  from holding Hyundai Green Food or generate 19.83% return on investment over 90 days.

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

Dongwon System  vs.  Hyundai Green Food

Dongwon System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongwon System 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyundai Green Food

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Green Food are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongwon System and Hyundai Green

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

The idea behind Dongwon System and Hyundai Green Food 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..