Correlation Between Hyundai and Naver
Can any of the company-specific risk be diversified away by investing in both Hyundai and Naver 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 Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Naver, you can compare the effects of market volatilities on Hyundai and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Naver.
Diversification Opportunities for Hyundai and Naver
Very good diversification
The 3 months correlation between Hyundai and Naver is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Hyundai i.e., Hyundai and Naver go up and down completely randomly.
Pair Corralation between Hyundai and Naver
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Naver. In addition to that, Hyundai is 1.32 times more volatile than Naver. It trades about -0.01 of its total potential returns per unit of risk. Naver is currently generating about 0.04 per unit of volatility. If you would invest 18,870,000 in Naver on September 1, 2024 and sell it today you would earn a total of 1,780,000 from holding Naver or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Naver
Performance |
| Timeline |
| Hyundai Motor |
| Naver |
Hyundai and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Naver
The main advantage of trading using opposite Hyundai and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Hyundai vs. LG Display | Hyundai vs. Hyundai Motor Co | Hyundai vs. Hyundai Motor Co | Hyundai vs. Adaptive Plasma Technology |
| Naver vs. Sunny Electronics Corp | Naver vs. Sungwoo Electronics Co | Naver vs. Wave Electronics Co | Naver vs. Sangshin Electronics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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