Correlation Between Hyundai and Incar Financial
Can any of the company-specific risk be diversified away by investing in both Hyundai and Incar Financial 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 Incar Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Incar Financial Service, you can compare the effects of market volatilities on Hyundai and Incar Financial 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 Incar Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Incar Financial.
Diversification Opportunities for Hyundai and Incar Financial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Incar is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Incar Financial Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incar Financial Service 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 Incar Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incar Financial Service has no effect on the direction of Hyundai i.e., Hyundai and Incar Financial go up and down completely randomly.
Pair Corralation between Hyundai and Incar Financial
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.65 times more return on investment than Incar Financial. However, Hyundai Motor is 1.54 times less risky than Incar Financial. It trades about -0.07 of its potential returns per unit of risk. Incar Financial Service is currently generating about -0.05 per unit of risk. If you would invest 21,700,000 in Hyundai Motor on September 18, 2024 and sell it today you would lose (600,000) from holding Hyundai Motor or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Incar Financial Service
Performance |
| Timeline |
| Hyundai Motor |
| Incar Financial Service |
Hyundai and Incar Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Incar Financial
The main advantage of trading using opposite Hyundai and Incar Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Incar Financial 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 Incar Financial will offset losses from the drop in Incar Financial's long position.| Hyundai vs. SBI Investment KOREA | Hyundai vs. A Tech Solution Co | Hyundai vs. Dong A Steel Technology | Hyundai vs. SV Investment |
| Incar Financial vs. Solution Advanced Technology | Incar Financial vs. Busan Industrial Co | Incar Financial vs. Busan Ind | Incar Financial vs. Sam Chun Dang |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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