Correlation Between Hyundai and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Hyundai and SBI Investment 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 SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and SBI Investment KOREA, you can compare the effects of market volatilities on Hyundai and SBI Investment 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 SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and SBI Investment.
Diversification Opportunities for Hyundai and SBI Investment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyundai and SBI is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA 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 SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Hyundai i.e., Hyundai and SBI Investment go up and down completely randomly.
Pair Corralation between Hyundai and SBI Investment
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the SBI Investment. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 1.44 times less risky than SBI Investment. The stock trades about -0.08 of its potential returns per unit of risk. The SBI Investment KOREA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 98,900 in SBI Investment KOREA on September 27, 2024 and sell it today you would lose (21,400) from holding SBI Investment KOREA or give up 21.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. SBI Investment KOREA
Performance |
| Timeline |
| Hyundai Motor |
| SBI Investment KOREA |
Hyundai and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and SBI Investment
The main advantage of trading using opposite Hyundai and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| Hyundai vs. Woori Technology Investment | Hyundai vs. Samsung Card Co | Hyundai vs. Korea Real Estate | Hyundai vs. CHOROKBAEM PANY Co |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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