Correlation Between Celltrion and Hyundai Industrial

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

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

Diversification Opportunities for Celltrion and Hyundai Industrial

0.4

Correlation Coefficient

Celltrion  Hyundai Industrial

Very weak diversification

The 3 months correlation between Celltrion and Hyundai is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial and Celltrion 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 Celltrion are associated (or correlated) with Hyundai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of Celltrion i.e., Celltrion and Hyundai Industrial go up and down completely randomly.

Pair Corralation between Celltrion and Hyundai Industrial

Assuming the 90 days trading horizon Celltrion is expected to generate 1.55 times less return on investment than Hyundai Industrial. In addition to that, Celltrion is 1.21 times more volatile than Hyundai Industrial Co. It trades about 0.02 of its total potential returns per unit of risk. Hyundai Industrial Co is currently generating about 0.04 per unit of volatility. If you would invest  501,649  in Hyundai Industrial Co on October 25, 2024 and sell it today you would earn a total of  15,351  from holding Hyundai Industrial Co or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Celltrion  vs.  Hyundai Industrial Co

Celltrion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celltrion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Celltrion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Industrial Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hyundai Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Celltrion and Hyundai Industrial

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

The idea behind Celltrion and Hyundai Industrial Co 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.