Correlation Between Hyundai Heavy and Bosung Power

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

By analyzing existing cross correlation between Hyundai Heavy Industries and Bosung Power Technology, you can compare the effects of market volatilities on Hyundai Heavy and Bosung Power 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 Heavy with a short position of Bosung Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Bosung Power.

Diversification Opportunities for Hyundai Heavy and Bosung Power

-0.06

Correlation Coefficient

Hyundai Heavy  Bosung Power

Good diversification

The 3 months correlation between Hyundai and Bosung is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and Hyundai Heavy 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 Heavy Industries are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Hyundai Heavy i.e., Hyundai Heavy and Bosung Power go up and down completely randomly.

Pair Corralation between Hyundai Heavy and Bosung Power

Assuming the 90 days trading horizon Hyundai Heavy is expected to generate 1.22 times less return on investment than Bosung Power. But when comparing it to its historical volatility, Hyundai Heavy Industries is 1.47 times less risky than Bosung Power. It trades about 0.03 of its potential returns per unit of risk. Bosung Power Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  306,500  in Bosung Power Technology on October 25, 2024 and sell it today you would earn a total of  8,000  from holding Bosung Power Technology or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Hyundai Heavy Industries  vs.  Bosung Power Technology

Hyundai Heavy Industries

Risk-Adjusted Performance

2 of 100

Weak

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

Bosung Power Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bosung Power Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bosung Power 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 Heavy and Bosung Power

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

The idea behind Hyundai Heavy Industries and Bosung Power Technology 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.