Correlation Between Ilji Technology and Hyundai Steel

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

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

Diversification Opportunities for Ilji Technology and Hyundai Steel

0.52

Correlation Coefficient

Ilji Technology  Hyundai Steel

Very weak diversification

The 3 months correlation between Ilji and Hyundai is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ilji Technology Co and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and Ilji Technology 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 Ilji Technology 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 Ilji Technology i.e., Ilji Technology and Hyundai Steel go up and down completely randomly.

Pair Corralation between Ilji Technology and Hyundai Steel

Assuming the 90 days trading horizon Ilji Technology is expected to generate 7.22 times less return on investment than Hyundai Steel. But when comparing it to its historical volatility, Ilji Technology Co is 1.4 times less risky than Hyundai Steel. It trades about 0.03 of its potential returns per unit of risk. Hyundai Steel is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,175,000  in Hyundai Steel on December 23, 2024 and sell it today you would earn a total of  705,000  from holding Hyundai Steel or generate 32.41% return on investment over 90 days.

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

Ilji Technology Co  vs.  Hyundai Steel

Ilji Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ilji Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ilji Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Steel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ilji Technology and Hyundai Steel

The main advantage of trading using opposite Ilji Technology and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilji Technology 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 Ilji Technology 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.