Correlation Between Hyundai and NEXTIN
Can any of the company-specific risk be diversified away by investing in both Hyundai and NEXTIN 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 NEXTIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and NEXTIN Inc, you can compare the effects of market volatilities on Hyundai and NEXTIN 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 NEXTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and NEXTIN.
Diversification Opportunities for Hyundai and NEXTIN
Very good diversification
The 3 months correlation between Hyundai and NEXTIN is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and NEXTIN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTIN Inc 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 NEXTIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTIN Inc has no effect on the direction of Hyundai i.e., Hyundai and NEXTIN go up and down completely randomly.
Pair Corralation between Hyundai and NEXTIN
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.7 times more return on investment than NEXTIN. However, Hyundai Motor is 1.42 times less risky than NEXTIN. It trades about 0.05 of its potential returns per unit of risk. NEXTIN Inc is currently generating about 0.02 per unit of risk. If you would invest 15,464,200 in Hyundai Motor on September 3, 2024 and sell it today you would earn a total of 6,385,800 from holding Hyundai Motor or generate 41.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. NEXTIN Inc
Performance |
| Timeline |
| Hyundai Motor |
| NEXTIN Inc |
Hyundai and NEXTIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and NEXTIN
The main advantage of trading using opposite Hyundai and NEXTIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, NEXTIN 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 NEXTIN will offset losses from the drop in NEXTIN's long position.| Hyundai vs. Dongbu Insurance Co | Hyundai vs. Okins Electronics Co | Hyundai vs. Total Soft Bank | Hyundai vs. Samji Electronics Co |
| NEXTIN vs. Parksystems Corp | NEXTIN vs. LEENO Industrial | NEXTIN vs. Tesna Inc | NEXTIN vs. Tokai Carbon Korea |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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