Correlation Between Eagle Veterinary and Hyosung Heavy

Can any of the company-specific risk be diversified away by investing in both Eagle Veterinary 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 Eagle Veterinary and Hyosung Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Veterinary Technology and Hyosung Heavy Industries, you can compare the effects of market volatilities on Eagle Veterinary 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 Eagle Veterinary with a short position of Hyosung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Veterinary and Hyosung Heavy.

Diversification Opportunities for Eagle Veterinary and Hyosung Heavy

-0.17

Correlation Coefficient

Eagle Veterinary  Hyosung Heavy

Good diversification

The 3 months correlation between Eagle and Hyosung is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Veterinary Technology 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 Eagle Veterinary 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 Eagle Veterinary Technology 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 Eagle Veterinary i.e., Eagle Veterinary and Hyosung Heavy go up and down completely randomly.

Pair Corralation between Eagle Veterinary and Hyosung Heavy

Assuming the 90 days trading horizon Eagle Veterinary Technology is expected to generate 0.48 times more return on investment than Hyosung Heavy. However, Eagle Veterinary Technology is 2.09 times less risky than Hyosung Heavy. It trades about 0.53 of its potential returns per unit of risk. Hyosung Heavy Industries is currently generating about 0.03 per unit of risk. If you would invest  422,935  in Eagle Veterinary Technology on October 10, 2024 and sell it today you would earn a total of  73,065  from holding Eagle Veterinary Technology or generate 17.28% return on investment over 90 days.

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

Eagle Veterinary Technology  vs.  Hyosung Heavy Industries

Eagle Veterinary Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Veterinary Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eagle Veterinary 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyosung Heavy Industries are ranked lower than 5 (%) 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 Eagle Veterinary and Hyosung Heavy

The main advantage of trading using opposite Eagle Veterinary and Hyosung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Veterinary 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 Eagle Veterinary Technology 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.