Correlation Between KT Hitel and Hyundai Mobis

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

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

Diversification Opportunities for KT Hitel and Hyundai Mobis

-0.41

Correlation Coefficient

KT Hitel  Hyundai Mobis

Very good diversification

The 3 months correlation between 036030 and Hyundai is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KT Hitel and Hyundai Mobis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Mobis and KT Hitel 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 KT Hitel are associated (or correlated) with Hyundai Mobis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Mobis has no effect on the direction of KT Hitel i.e., KT Hitel and Hyundai Mobis go up and down completely randomly.

Pair Corralation between KT Hitel and Hyundai Mobis

Assuming the 90 days trading horizon KT Hitel is expected to under-perform the Hyundai Mobis. In addition to that, KT Hitel is 1.6 times more volatile than Hyundai Mobis. It trades about -0.09 of its total potential returns per unit of risk. Hyundai Mobis is currently generating about -0.08 per unit of volatility. If you would invest  25,400,000  in Hyundai Mobis on September 22, 2024 and sell it today you would lose (1,000,000) from holding Hyundai Mobis or give up 3.94% of portfolio value over 90 days.

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

KT Hitel  vs.  Hyundai Mobis

KT Hitel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KT Hitel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KT Hitel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Mobis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Mobis are ranked lower than 6 (%) 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 January 2025.

Pair Trading with KT Hitel and Hyundai Mobis

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

The idea behind KT Hitel and Hyundai Mobis 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.