Correlation Between Daehan Steel and Hyundai Autoever

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

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

Diversification Opportunities for Daehan Steel and Hyundai Autoever

-0.3

Correlation Coefficient

Daehan Steel  Hyundai Autoever

Very good diversification

The 3 months correlation between Daehan and Hyundai is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Steel and Hyundai Autoever Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Autoever Corp and Daehan Steel 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 Daehan Steel are associated (or correlated) with Hyundai Autoever. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Autoever Corp has no effect on the direction of Daehan Steel i.e., Daehan Steel and Hyundai Autoever go up and down completely randomly.

Pair Corralation between Daehan Steel and Hyundai Autoever

Assuming the 90 days trading horizon Daehan Steel is expected to generate 3.82 times less return on investment than Hyundai Autoever. But when comparing it to its historical volatility, Daehan Steel is 1.52 times less risky than Hyundai Autoever. It trades about 0.01 of its potential returns per unit of risk. Hyundai Autoever Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,900,000  in Hyundai Autoever Corp on December 24, 2024 and sell it today you would earn a total of  290,000  from holding Hyundai Autoever Corp or generate 2.25% return on investment over 90 days.

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

Daehan Steel  vs.  Hyundai Autoever Corp

Daehan Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daehan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daehan Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Autoever Corp

Risk-Adjusted Performance

Weak

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

Pair Trading with Daehan Steel and Hyundai Autoever

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

The idea behind Daehan Steel and Hyundai Autoever Corp 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 CEOs Directory module to screen CEOs from public companies around the world.