Correlation Between Celltrion Pharm and Hyundai Heavy

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

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

Diversification Opportunities for Celltrion Pharm and Hyundai Heavy

0.09

Correlation Coefficient

Celltrion Pharm  Hyundai Heavy

Significant diversification

The 3 months correlation between Celltrion and Hyundai is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries and Celltrion Pharm 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 Pharm are associated (or correlated) with Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Celltrion Pharm i.e., Celltrion Pharm and Hyundai Heavy go up and down completely randomly.

Pair Corralation between Celltrion Pharm and Hyundai Heavy

Assuming the 90 days trading horizon Celltrion Pharm is expected to under-perform the Hyundai Heavy. In addition to that, Celltrion Pharm is 1.86 times more volatile than Hyundai Heavy Industries. It trades about -0.04 of its total potential returns per unit of risk. Hyundai Heavy Industries is currently generating about 0.21 per unit of volatility. If you would invest  7,180,000  in Hyundai Heavy Industries on October 6, 2024 and sell it today you would earn a total of  1,240,000  from holding Hyundai Heavy Industries or generate 17.27% return on investment over 90 days.

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

Celltrion Pharm  vs.  Hyundai Heavy Industries

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyundai Heavy Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Heavy Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Heavy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Celltrion Pharm and Hyundai Heavy

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

The idea behind Celltrion Pharm and Hyundai 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.