Correlation Between Hyundai Engineering and DONGKUK TED

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

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

Diversification Opportunities for Hyundai Engineering and DONGKUK TED

0.85

Correlation Coefficient

Hyundai Engineering  DONGKUK TED

Very poor diversification

The 3 months correlation between Hyundai and DONGKUK is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Engineering Plastics and DONGKUK TED METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK TED METAL and Hyundai Engineering 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 Hyundai Engineering Plastics are associated (or correlated) with DONGKUK TED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK TED METAL has no effect on the direction of Hyundai Engineering i.e., Hyundai Engineering and DONGKUK TED go up and down completely randomly.

Pair Corralation between Hyundai Engineering and DONGKUK TED

Assuming the 90 days trading horizon Hyundai Engineering is expected to generate 4.07 times less return on investment than DONGKUK TED. In addition to that, Hyundai Engineering is 1.1 times more volatile than DONGKUK TED METAL. It trades about 0.06 of its total potential returns per unit of risk. DONGKUK TED METAL is currently generating about 0.25 per unit of volatility. If you would invest  604,000  in DONGKUK TED METAL on October 12, 2024 and sell it today you would earn a total of  36,000  from holding DONGKUK TED METAL or generate 5.96% return on investment over 90 days.

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

Hyundai Engineering Plastics  vs.  DONGKUK TED METAL

Hyundai Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Engineering Plastics 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.

DONGKUK TED METAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hyundai Engineering and DONGKUK TED

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

The idea behind Hyundai Engineering Plastics and DONGKUK TED METAL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.