Correlation Between Hyundai Green and Youl Chon

Can any of the company-specific risk be diversified away by investing in both Hyundai Green and Youl Chon 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 Youl Chon 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 Youl Chon Chemical, you can compare the effects of market volatilities on Hyundai Green and Youl Chon 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 Youl Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Green and Youl Chon.

Diversification Opportunities for Hyundai Green and Youl Chon

-0.23

Correlation Coefficient

Hyundai Green  Youl Chon

Very good diversification

The 3 months correlation between Hyundai and Youl is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Green Food and Youl Chon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youl Chon Chemical 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 Youl Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youl Chon Chemical has no effect on the direction of Hyundai Green i.e., Hyundai Green and Youl Chon go up and down completely randomly.

Pair Corralation between Hyundai Green and Youl Chon

Assuming the 90 days trading horizon Hyundai Green Food is expected to generate 0.49 times more return on investment than Youl Chon. However, Hyundai Green Food is 2.06 times less risky than Youl Chon. It trades about 0.14 of its potential returns per unit of risk. Youl Chon Chemical is currently generating about -0.5 per unit of risk. If you would invest  1,330,000  in Hyundai Green Food on September 12, 2024 and sell it today you would earn a total of  63,000  from holding Hyundai Green Food or generate 4.74% return on investment over 90 days.

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

Hyundai Green Food  vs.  Youl Chon Chemical

Hyundai Green Food

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Green Food are ranked lower than 17 (%) 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.

Youl Chon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Youl Chon Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Youl Chon 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 Youl Chon

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

The idea behind Hyundai Green Food and Youl Chon Chemical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.