Correlation Between Hyundai and SK Holdings
Can any of the company-specific risk be diversified away by investing in both Hyundai and SK Holdings 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 SK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and SK Holdings Co, you can compare the effects of market volatilities on Hyundai and SK Holdings 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 SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and SK Holdings.
Diversification Opportunities for Hyundai and SK Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and 034730 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of Hyundai i.e., Hyundai and SK Holdings go up and down completely randomly.
Pair Corralation between Hyundai and SK Holdings
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.9 times more return on investment than SK Holdings. However, Hyundai Motor is 1.11 times less risky than SK Holdings. It trades about 0.03 of its potential returns per unit of risk. SK Holdings Co is currently generating about -0.01 per unit of risk. If you would invest 18,306,200 in Hyundai Motor on September 1, 2024 and sell it today you would earn a total of 3,543,800 from holding Hyundai Motor or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. SK Holdings Co
Performance |
| Timeline |
| Hyundai Motor |
| SK Holdings |
Hyundai and SK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and SK Holdings
The main advantage of trading using opposite Hyundai and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, SK Holdings 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 SK Holdings will offset losses from the drop in SK Holdings' long position.| Hyundai vs. LG Display | Hyundai vs. Hyundai Motor Co | Hyundai vs. Hyundai Motor Co | Hyundai vs. Adaptive Plasma Technology |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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