Correlation Between Duksan Hi and Hyundai Industrial

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

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

Diversification Opportunities for Duksan Hi and Hyundai Industrial

0.69

Correlation Coefficient

Duksan Hi  Hyundai Industrial

Poor diversification

The 3 months correlation between Duksan and Hyundai is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Duksan Hi Metal and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial and Duksan Hi 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 Duksan Hi Metal 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 Duksan Hi i.e., Duksan Hi and Hyundai Industrial go up and down completely randomly.

Pair Corralation between Duksan Hi and Hyundai Industrial

Assuming the 90 days trading horizon Duksan Hi is expected to generate 1.22 times less return on investment than Hyundai Industrial. In addition to that, Duksan Hi is 1.04 times more volatile than Hyundai Industrial Co. It trades about 0.12 of its total potential returns per unit of risk. Hyundai Industrial Co is currently generating about 0.16 per unit of volatility. If you would invest  493,000  in Hyundai Industrial Co on December 25, 2024 and sell it today you would earn a total of  110,000  from holding Hyundai Industrial Co or generate 22.31% return on investment over 90 days.

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

Duksan Hi Metal  vs.  Hyundai Industrial Co

Duksan Hi Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duksan Hi Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duksan Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Hyundai Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Industrial Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duksan Hi and Hyundai Industrial

The main advantage of trading using opposite Duksan Hi and Hyundai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duksan Hi 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 Duksan Hi Metal 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.