Correlation Between Hyundai and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Hyundai and Asia Pacific 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 Asia Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Asia Pacific Satellite, you can compare the effects of market volatilities on Hyundai and Asia Pacific 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 Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Asia Pacific.
Diversification Opportunities for Hyundai and Asia Pacific
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Asia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Asia Pacific Satellite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Satellite 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Satellite has no effect on the direction of Hyundai i.e., Hyundai and Asia Pacific go up and down completely randomly.
Pair Corralation between Hyundai and Asia Pacific
Assuming the 90 days trading horizon Hyundai is expected to generate 16.67 times less return on investment than Asia Pacific. But when comparing it to its historical volatility, Hyundai Motor is 3.42 times less risky than Asia Pacific. It trades about 0.03 of its potential returns per unit of risk. Asia Pacific Satellite is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,089,000 in Asia Pacific Satellite on September 3, 2024 and sell it today you would earn a total of 217,000 from holding Asia Pacific Satellite or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Asia Pacific Satellite
Performance |
| Timeline |
| Hyundai Motor |
| Asia Pacific Satellite |
Hyundai and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Asia Pacific
The main advantage of trading using opposite Hyundai and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.| Hyundai vs. Dongbu Insurance Co | Hyundai vs. Okins Electronics Co | Hyundai vs. Total Soft Bank | Hyundai vs. Samji Electronics Co |
| Asia Pacific vs. PJ Metal Co | Asia Pacific vs. Kukil Metal Co | Asia Pacific vs. Foodnamoo | Asia Pacific vs. Sempio Foods 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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