Correlation Between Hyundai and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both Hyundai and Seojin Automotive 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 Seojin Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Seojin Automotive CoLtd, you can compare the effects of market volatilities on Hyundai and Seojin Automotive 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 Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Seojin Automotive.
Diversification Opportunities for Hyundai and Seojin Automotive
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Seojin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd 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 Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of Hyundai i.e., Hyundai and Seojin Automotive go up and down completely randomly.
Pair Corralation between Hyundai and Seojin Automotive
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.99 times more return on investment than Seojin Automotive. However, Hyundai Motor is 1.01 times less risky than Seojin Automotive. It trades about -0.05 of its potential returns per unit of risk. Seojin Automotive CoLtd is currently generating about -0.17 per unit of risk. If you would invest 26,015,200 in Hyundai Motor on September 3, 2024 and sell it today you would lose (4,165,200) from holding Hyundai Motor or give up 16.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Seojin Automotive CoLtd
Performance |
| Timeline |
| Hyundai Motor |
| Seojin Automotive CoLtd |
Hyundai and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Seojin Automotive
The main advantage of trading using opposite Hyundai and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive's long position.| Hyundai vs. Dongbu Insurance Co | Hyundai vs. Okins Electronics Co | Hyundai vs. Total Soft Bank | Hyundai vs. Samji Electronics Co |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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