Correlation Between Hyundai and Nice Information
Can any of the company-specific risk be diversified away by investing in both Hyundai and Nice Information 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 Nice Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Nice Information Telecommunication, you can compare the effects of market volatilities on Hyundai and Nice Information 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 Nice Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Nice Information.
Diversification Opportunities for Hyundai and Nice Information
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Nice is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel 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 Nice Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Information Tel has no effect on the direction of Hyundai i.e., Hyundai and Nice Information go up and down completely randomly.
Pair Corralation between Hyundai and Nice Information
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.41 times more return on investment than Nice Information. However, Hyundai is 1.41 times more volatile than Nice Information Telecommunication. It trades about 0.03 of its potential returns per unit of risk. Nice Information Telecommunication is currently generating about 0.03 per unit of risk. If you would invest 20,700,000 in Hyundai Motor on September 13, 2024 and sell it today you would earn a total of 200,000 from holding Hyundai Motor or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Nice Information Telecommunica
Performance |
| Timeline |
| Hyundai Motor |
| Nice Information Tel |
Hyundai and Nice Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Nice Information
The main advantage of trading using opposite Hyundai and Nice Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Nice Information 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 Nice Information will offset losses from the drop in Nice Information's long position.| Hyundai vs. Daou Data Corp | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
| Nice Information vs. Cube Entertainment | Nice Information vs. Dreamus Company | Nice Information vs. LG Energy Solution | Nice Information vs. Dongwon System |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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