Correlation Between Hyundai Heavy and Heungkuk Metaltech

Can any of the company-specific risk be diversified away by investing in both Hyundai Heavy and Heungkuk Metaltech 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 Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Hyundai Heavy and Heungkuk Metaltech 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 Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Heungkuk Metaltech.

Diversification Opportunities for Hyundai Heavy and Heungkuk Metaltech

0.43

Correlation Coefficient

Hyundai Heavy  Heungkuk Metaltech

Very weak diversification

The 3 months correlation between Hyundai and Heungkuk is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd 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 Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Hyundai Heavy i.e., Hyundai Heavy and Heungkuk Metaltech go up and down completely randomly.

Pair Corralation between Hyundai Heavy and Heungkuk Metaltech

Assuming the 90 days trading horizon Hyundai Heavy is expected to generate 1.81 times less return on investment than Heungkuk Metaltech. But when comparing it to its historical volatility, Hyundai Heavy Industries is 1.1 times less risky than Heungkuk Metaltech. It trades about 0.05 of its potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  478,182  in Heungkuk Metaltech CoLtd on October 10, 2024 and sell it today you would earn a total of  46,818  from holding Heungkuk Metaltech CoLtd or generate 9.79% return on investment over 90 days.

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

Hyundai Heavy Industries  vs.  Heungkuk Metaltech CoLtd

Hyundai Heavy Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Heavy Industries are ranked lower than 3 (%) 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.

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hyundai Heavy and Heungkuk Metaltech

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

The idea behind Hyundai Heavy Industries and Heungkuk Metaltech CoLtd 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.