Correlation Between Ilji Technology and Hyosung Heavy

Can any of the company-specific risk be diversified away by investing in both Ilji Technology 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 Ilji Technology and Hyosung Heavy 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 Hyosung Heavy Industries, you can compare the effects of market volatilities on Ilji Technology 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 Ilji Technology with a short position of Hyosung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilji Technology and Hyosung Heavy.

Diversification Opportunities for Ilji Technology and Hyosung Heavy

0.45

Correlation Coefficient

Ilji Technology  Hyosung Heavy

Very weak diversification

The 3 months correlation between Ilji and Hyosung is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ilji Technology Co 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 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 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 Ilji Technology i.e., Ilji Technology and Hyosung Heavy go up and down completely randomly.

Pair Corralation between Ilji Technology and Hyosung Heavy

Assuming the 90 days trading horizon Ilji Technology is expected to generate 4.35 times less return on investment than Hyosung Heavy. But when comparing it to its historical volatility, Ilji Technology Co is 1.7 times less risky than Hyosung Heavy. It trades about 0.03 of its potential returns per unit of risk. Hyosung Heavy Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  38,795,500  in Hyosung Heavy Industries on December 24, 2024 and sell it today you would earn a total of  6,304,500  from holding Hyosung Heavy Industries or generate 16.25% 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.  Hyosung Heavy Industries

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.

Hyosung Heavy Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyosung Heavy Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyosung Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ilji Technology and Hyosung Heavy

The main advantage of trading using opposite Ilji Technology and Hyosung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilji Technology 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.

The idea behind Ilji Technology Co and Hyosung Heavy Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.