Correlation Between Hyundai and TAEYANG
Can any of the company-specific risk be diversified away by investing in both Hyundai and TAEYANG 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 TAEYANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and TAEYANG, you can compare the effects of market volatilities on Hyundai and TAEYANG 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 TAEYANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and TAEYANG.
Diversification Opportunities for Hyundai and TAEYANG
Very good diversification
The 3 months correlation between Hyundai and TAEYANG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of Hyundai i.e., Hyundai and TAEYANG go up and down completely randomly.
Pair Corralation between Hyundai and TAEYANG
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the TAEYANG. In addition to that, Hyundai is 1.27 times more volatile than TAEYANG. It trades about -0.12 of its total potential returns per unit of risk. TAEYANG is currently generating about 0.08 per unit of volatility. If you would invest 622,000 in TAEYANG on September 19, 2024 and sell it today you would earn a total of 14,000 from holding TAEYANG or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. TAEYANG
Performance |
| Timeline |
| Hyundai Motor |
| TAEYANG |
Hyundai and TAEYANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and TAEYANG
The main advantage of trading using opposite Hyundai and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.| Hyundai vs. GS Engineering Construction | Hyundai vs. KCC Engineering Construction | Hyundai vs. Seoam Machinery Industry | Hyundai vs. Tuksu Engineering ConstructionLtd |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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