Correlation Between Hyundai Heavy and Daishin Balance

Can any of the company-specific risk be diversified away by investing in both Hyundai Heavy and Daishin Balance 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 Daishin Balance 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 Daishin Balance No, you can compare the effects of market volatilities on Hyundai Heavy and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Heavy and Daishin Balance.

Diversification Opportunities for Hyundai Heavy and Daishin Balance

-0.46

Correlation Coefficient

Hyundai Heavy  Daishin Balance

Very good diversification

The 3 months correlation between Hyundai and Daishin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Heavy Industries and Daishin Balance No in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No has no effect on the direction of Hyundai Heavy i.e., Hyundai Heavy and Daishin Balance go up and down completely randomly.

Pair Corralation between Hyundai Heavy and Daishin Balance

Assuming the 90 days trading horizon Hyundai Heavy Industries is expected to generate 1.55 times more return on investment than Daishin Balance. However, Hyundai Heavy is 1.55 times more volatile than Daishin Balance No. It trades about 0.22 of its potential returns per unit of risk. Daishin Balance No is currently generating about -0.07 per unit of risk. If you would invest  19,270,000  in Hyundai Heavy Industries on October 21, 2024 and sell it today you would earn a total of  11,730,000  from holding Hyundai Heavy Industries or generate 60.87% return on investment over 90 days.

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

Hyundai Heavy Industries  vs.  Daishin Balance No

Hyundai Heavy Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Heavy Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Daishin Balance No

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hyundai Heavy and Daishin Balance

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

The idea behind Hyundai Heavy Industries and Daishin Balance No 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.