Correlation Between Humasis Co and Hyundai Engineering

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

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

Diversification Opportunities for Humasis Co and Hyundai Engineering

-0.47

Correlation Coefficient

Humasis Co  Hyundai Engineering

Very good diversification

The 3 months correlation between Humasis and Hyundai is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering and Humasis Co 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 Humasis Co are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Humasis Co i.e., Humasis Co and Hyundai Engineering go up and down completely randomly.

Pair Corralation between Humasis Co and Hyundai Engineering

Assuming the 90 days trading horizon Humasis Co is expected to under-perform the Hyundai Engineering. In addition to that, Humasis Co is 1.25 times more volatile than Hyundai Engineering Construction. It trades about -0.06 of its total potential returns per unit of risk. Hyundai Engineering Construction is currently generating about 0.13 per unit of volatility. If you would invest  2,780,000  in Hyundai Engineering Construction on December 3, 2024 and sell it today you would earn a total of  570,000  from holding Hyundai Engineering Construction or generate 20.5% return on investment over 90 days.

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

Humasis Co  vs.  Hyundai Engineering Constructi

Humasis Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humasis Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyundai Engineering

Risk-Adjusted Performance

OK

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

Pair Trading with Humasis Co and Hyundai Engineering

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

The idea behind Humasis Co and Hyundai Engineering Construction 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.