Correlation Between EBEST Investment and Hyunwoo Industrial

Can any of the company-specific risk be diversified away by investing in both EBEST Investment and Hyunwoo Industrial 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 EBEST Investment and Hyunwoo Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EBEST Investment Securities and Hyunwoo Industrial Co, you can compare the effects of market volatilities on EBEST Investment and Hyunwoo Industrial 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 EBEST Investment with a short position of Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Hyunwoo Industrial.

Diversification Opportunities for EBEST Investment and Hyunwoo Industrial

0.92

Correlation Coefficient

EBEST Investment  Hyunwoo Industrial

Almost no diversification

The 3 months correlation between EBEST and Hyunwoo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of EBEST Investment i.e., EBEST Investment and Hyunwoo Industrial go up and down completely randomly.

Pair Corralation between EBEST Investment and Hyunwoo Industrial

Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the Hyunwoo Industrial. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.58 times less risky than Hyunwoo Industrial. The stock trades about -0.15 of its potential returns per unit of risk. The Hyunwoo Industrial Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  300,500  in Hyunwoo Industrial Co on September 14, 2024 and sell it today you would lose (37,500) from holding Hyunwoo Industrial Co or give up 12.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.31%
Values	Daily Returns

EBEST Investment Securities  vs.  Hyunwoo Industrial Co

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hyunwoo Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyunwoo Industrial Co 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 EBEST Investment and Hyunwoo Industrial

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

The idea behind EBEST Investment Securities and Hyunwoo Industrial Co 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.