Correlation Between Choil Aluminum and Hyosung Heavy
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Hyosung Heavy 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 Choil Aluminum and Hyosung Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Hyosung Heavy Industries, you can compare the effects of market volatilities on Choil Aluminum and Hyosung Heavy 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 Choil Aluminum with a short position of Hyosung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Hyosung Heavy.
Diversification Opportunities for Choil Aluminum and Hyosung Heavy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choil and Hyosung is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Hyosung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Heavy Industries and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Hyosung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Heavy Industries has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Hyosung Heavy go up and down completely randomly.
Pair Corralation between Choil Aluminum and Hyosung Heavy
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 0.77 times more return on investment than Hyosung Heavy. However, Choil Aluminum is 1.3 times less risky than Hyosung Heavy. It trades about 0.31 of its potential returns per unit of risk. Hyosung Heavy Industries is currently generating about 0.02 per unit of risk. If you would invest 126,400 in Choil Aluminum on October 8, 2024 and sell it today you would earn a total of 17,900 from holding Choil Aluminum or generate 14.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Choil Aluminum vs. Hyosung Heavy Industries
Performance |
Timeline |
Choil Aluminum |
Hyosung Heavy Industries |
Choil Aluminum and Hyosung Heavy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Choil Aluminum and Hyosung Heavy
The main advantage of trading using opposite Choil Aluminum and Hyosung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Hyosung Heavy 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 Hyosung Heavy will offset losses from the drop in Hyosung Heavy's long position.Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. UNISEM Co | Choil Aluminum vs. RPBio Inc |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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