Correlation Between INSUN Environmental and Hyundai
Can any of the company-specific risk be diversified away by investing in both INSUN Environmental and Hyundai 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 INSUN Environmental and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSUN Environmental New and Hyundai Motor, you can compare the effects of market volatilities on INSUN Environmental and Hyundai 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 INSUN Environmental with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Hyundai.
Diversification Opportunities for INSUN Environmental and Hyundai
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INSUN and Hyundai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and INSUN Environmental 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 INSUN Environmental New are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of INSUN Environmental i.e., INSUN Environmental and Hyundai go up and down completely randomly.
Pair Corralation between INSUN Environmental and Hyundai
Assuming the 90 days trading horizon INSUN Environmental New is expected to generate 1.78 times more return on investment than Hyundai. However, INSUN Environmental is 1.78 times more volatile than Hyundai Motor. It trades about 0.11 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.02 per unit of risk. If you would invest 501,000 in INSUN Environmental New on October 4, 2024 and sell it today you would earn a total of 37,000 from holding INSUN Environmental New or generate 7.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
INSUN Environmental New vs. Hyundai Motor
Performance |
Timeline |
INSUN Environmental New |
Hyundai Motor |
INSUN Environmental and Hyundai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INSUN Environmental and Hyundai
The main advantage of trading using opposite INSUN Environmental and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental position performs unexpectedly, Hyundai 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 will offset losses from the drop in Hyundai's long position.INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING Co |
Hyundai vs. Samsung Electronics Co | Hyundai vs. Samsung Electronics Co | Hyundai vs. LG Energy Solution | Hyundai vs. SK Hynix |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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