Correlation Between Hyundai Green and LG Uplus

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

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

Diversification Opportunities for Hyundai Green and LG Uplus

0.6

Correlation Coefficient

Hyundai Green  LG Uplus

Poor diversification

The 3 months correlation between Hyundai and 032640 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Green Food and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and Hyundai Green 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 Green Food are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Hyundai Green i.e., Hyundai Green and LG Uplus go up and down completely randomly.

Pair Corralation between Hyundai Green and LG Uplus

Assuming the 90 days trading horizon Hyundai Green Food is expected to generate 1.54 times more return on investment than LG Uplus. However, Hyundai Green is 1.54 times more volatile than LG Uplus. It trades about 0.04 of its potential returns per unit of risk. LG Uplus is currently generating about 0.01 per unit of risk. If you would invest  1,139,000  in Hyundai Green Food on October 23, 2024 and sell it today you would earn a total of  235,000  from holding Hyundai Green Food or generate 20.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.25%
Values	Daily Returns

Hyundai Green Food  vs.  LG Uplus

Hyundai Green Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Green Food are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Green sustained solid returns over the last few months and may actually be approaching a breakup point.

LG Uplus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LG Uplus are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LG Uplus 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 Green and LG Uplus

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

The idea behind Hyundai Green Food and LG Uplus 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..