Correlation Between Raontech and Hyundai Industrial

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

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

Diversification Opportunities for Raontech and Hyundai Industrial

0.91

Correlation Coefficient

Raontech  Hyundai Industrial

Almost no diversification

The 3 months correlation between Raontech and Hyundai is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial and Raontech 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 Raontech are associated (or correlated) with Hyundai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of Raontech i.e., Raontech and Hyundai Industrial go up and down completely randomly.

Pair Corralation between Raontech and Hyundai Industrial

Assuming the 90 days trading horizon Raontech is expected to generate 2.18 times more return on investment than Hyundai Industrial. However, Raontech is 2.18 times more volatile than Hyundai Industrial Co. It trades about -0.05 of its potential returns per unit of risk. Hyundai Industrial Co is currently generating about -0.12 per unit of risk. If you would invest  429,000  in Raontech on September 28, 2024 and sell it today you would lose (65,500) from holding Raontech or give up 15.27% of portfolio value over 90 days.

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

Raontech  vs.  Hyundai Industrial Co

Raontech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raontech 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.

Hyundai Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Industrial Co 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.

Pair Trading with Raontech and Hyundai Industrial

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

The idea behind Raontech and Hyundai 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.