Correlation Between UJU Electronics and Hyundai Steel

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

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

Diversification Opportunities for UJU Electronics and Hyundai Steel

0.87

Correlation Coefficient

UJU Electronics  Hyundai Steel

Very poor diversification

The 3 months correlation between UJU and Hyundai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UJU Electronics Co and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and UJU Electronics 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 UJU Electronics 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 UJU Electronics i.e., UJU Electronics and Hyundai Steel go up and down completely randomly.

Pair Corralation between UJU Electronics and Hyundai Steel

Assuming the 90 days trading horizon UJU Electronics Co is expected to generate 1.14 times more return on investment than Hyundai Steel. However, UJU Electronics is 1.14 times more volatile than Hyundai Steel. It trades about 0.28 of its potential returns per unit of risk. Hyundai Steel is currently generating about 0.17 per unit of risk. If you would invest  1,550,942  in UJU Electronics Co on December 23, 2024 and sell it today you would earn a total of  1,124,058  from holding UJU Electronics Co or generate 72.48% return on investment over 90 days.

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

UJU Electronics Co  vs.  Hyundai Steel

UJU Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UJU Electronics Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UJU Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

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 UJU Electronics and Hyundai Steel

The main advantage of trading using opposite UJU Electronics and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UJU Electronics 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 UJU Electronics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.