Correlation Between Hyundai and Interflex
Can any of the company-specific risk be diversified away by investing in both Hyundai and Interflex 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 Interflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Interflex Co, you can compare the effects of market volatilities on Hyundai and Interflex 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 Interflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Interflex.
Diversification Opportunities for Hyundai and Interflex
Very poor diversification
The 3 months correlation between Hyundai and Interflex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex 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 Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of Hyundai i.e., Hyundai and Interflex go up and down completely randomly.
Pair Corralation between Hyundai and Interflex
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.78 times more return on investment than Interflex. However, Hyundai Motor is 1.27 times less risky than Interflex. It trades about 0.03 of its potential returns per unit of risk. Interflex Co is currently generating about -0.11 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Interflex Co
Performance |
| Timeline |
| Hyundai Motor |
| Interflex |
Hyundai and Interflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Interflex
The main advantage of trading using opposite Hyundai and Interflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Interflex 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 Interflex will offset losses from the drop in Interflex's long position.| Hyundai vs. Daou Data Corp | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
| Interflex vs. Cube Entertainment | Interflex vs. Dreamus Company | Interflex vs. LG Energy Solution | Interflex 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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