Correlation Between Chinyang Hold and Hyundai Steel

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

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

Diversification Opportunities for Chinyang Hold and Hyundai Steel

0.21

Correlation Coefficient

Chinyang Hold  Hyundai Steel

Modest diversification

The 3 months correlation between Chinyang and Hyundai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chinyang Hold and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and Chinyang Hold 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 Chinyang Hold are associated (or correlated) with Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of Chinyang Hold i.e., Chinyang Hold and Hyundai Steel go up and down completely randomly.

Pair Corralation between Chinyang Hold and Hyundai Steel

Assuming the 90 days trading horizon Chinyang Hold is expected to generate 0.27 times more return on investment than Hyundai Steel. However, Chinyang Hold is 3.7 times less risky than Hyundai Steel. It trades about 0.01 of its potential returns per unit of risk. Hyundai Steel is currently generating about -0.06 per unit of risk. If you would invest  318,000  in Chinyang Hold on September 23, 2024 and sell it today you would earn a total of  1,000.00  from holding Chinyang Hold or generate 0.31% return on investment over 90 days.

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

Chinyang Hold  vs.  Hyundai Steel

Chinyang Hold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinyang Hold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Chinyang Hold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Steel 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 Chinyang Hold and Hyundai Steel

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

The idea behind Chinyang Hold and Hyundai Steel 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.