Correlation Between Hyundai and Shinsegae
Can any of the company-specific risk be diversified away by investing in both Hyundai and Shinsegae 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 and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Shinsegae, you can compare the effects of market volatilities on Hyundai and Shinsegae 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 with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Shinsegae.
Diversification Opportunities for Hyundai and Shinsegae
Poor diversification
The 3 months correlation between Hyundai and Shinsegae is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and Hyundai 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 Motor are associated (or correlated) with Shinsegae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae has no effect on the direction of Hyundai i.e., Hyundai and Shinsegae go up and down completely randomly.
Pair Corralation between Hyundai and Shinsegae
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.04 times more return on investment than Shinsegae. However, Hyundai is 1.04 times more volatile than Shinsegae. It trades about 0.04 of its potential returns per unit of risk. Shinsegae is currently generating about -0.28 per unit of risk. If you would invest 21,500,000 in Hyundai Motor on September 1, 2024 and sell it today you would earn a total of 350,000 from holding Hyundai Motor or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Motor vs. Shinsegae
Performance |
| Timeline |
| Hyundai Motor |
| Shinsegae |
Hyundai and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Shinsegae
The main advantage of trading using opposite Hyundai and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Shinsegae 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 Shinsegae will offset losses from the drop in Shinsegae's long position.| Hyundai vs. LG Display | Hyundai vs. Hyundai Motor Co | Hyundai vs. Hyundai Motor Co | Hyundai vs. Adaptive Plasma Technology |
| Shinsegae vs. LG Display | Shinsegae vs. Hyundai Motor | Shinsegae vs. Hyundai Motor Co | Shinsegae vs. Hyundai Motor Co |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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