Correlation Between Hyundai and Ecoplastic
Can any of the company-specific risk be diversified away by investing in both Hyundai and Ecoplastic 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 Ecoplastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Ecoplastic, you can compare the effects of market volatilities on Hyundai and Ecoplastic 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 Ecoplastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Ecoplastic.
Diversification Opportunities for Hyundai and Ecoplastic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Ecoplastic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Hyundai i.e., Hyundai and Ecoplastic go up and down completely randomly.
Pair Corralation between Hyundai and Ecoplastic
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.65 times more return on investment than Ecoplastic. However, Hyundai Motor is 1.53 times less risky than Ecoplastic. It trades about 0.03 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.06 per unit of risk. If you would invest 18,269,100 in Hyundai Motor on August 31, 2024 and sell it today you would earn a total of 3,580,900 from holding Hyundai Motor or generate 19.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Ecoplastic
Performance |
| Timeline |
| Hyundai Motor |
| Ecoplastic |
Hyundai and Ecoplastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Ecoplastic
The main advantage of trading using opposite Hyundai and Ecoplastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Ecoplastic 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 Ecoplastic will offset losses from the drop in Ecoplastic's long position.| Hyundai vs. LG Display | Hyundai vs. Hyundai Motor Co | Hyundai vs. Hyundai Motor Co | Hyundai vs. Adaptive Plasma Technology |
| Ecoplastic vs. LG Display | Ecoplastic vs. Hyundai Motor | Ecoplastic vs. Hyundai Motor Co | Ecoplastic 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |