Correlation Between Hyunwoo Industrial and Hyundai Steel

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

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

Diversification Opportunities for Hyunwoo Industrial and Hyundai Steel

0.75

Correlation Coefficient

Hyunwoo Industrial  Hyundai Steel

Poor diversification

The 3 months correlation between Hyunwoo and Hyundai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyunwoo Industrial Co and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and Hyunwoo Industrial 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 Hyunwoo Industrial Co are associated (or correlated) with Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of Hyunwoo Industrial i.e., Hyunwoo Industrial and Hyundai Steel go up and down completely randomly.

Pair Corralation between Hyunwoo Industrial and Hyundai Steel

Assuming the 90 days trading horizon Hyunwoo Industrial is expected to generate 3.27 times less return on investment than Hyundai Steel. But when comparing it to its historical volatility, Hyunwoo Industrial Co is 1.55 times less risky than Hyundai Steel. It trades about 0.06 of its potential returns per unit of risk. Hyundai Steel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,047,276  in Hyundai Steel on December 30, 2024 and sell it today you would earn a total of  532,724  from holding Hyundai Steel or generate 26.02% return on investment over 90 days.

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

Hyunwoo Industrial Co  vs.  Hyundai Steel

Hyunwoo Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyunwoo Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyunwoo Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hyundai Steel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyunwoo Industrial and Hyundai Steel

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

The idea behind Hyunwoo Industrial Co and Hyundai Steel 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.