Correlation Between Hyundai and DB HiTek
Can any of the company-specific risk be diversified away by investing in both Hyundai and DB HiTek 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 DB HiTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and DB HiTek Co, you can compare the effects of market volatilities on Hyundai and DB HiTek 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 DB HiTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and DB HiTek.
Diversification Opportunities for Hyundai and DB HiTek
Poor diversification
The 3 months correlation between Hyundai and 000990 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and DB HiTek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB HiTek 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 Co are associated (or correlated) with DB HiTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB HiTek has no effect on the direction of Hyundai i.e., Hyundai and DB HiTek go up and down completely randomly.
Pair Corralation between Hyundai and DB HiTek
Assuming the 90 days trading horizon Hyundai is expected to generate 2.48 times less return on investment than DB HiTek. But when comparing it to its historical volatility, Hyundai Motor Co is 2.18 times less risky than DB HiTek. It trades about 0.05 of its potential returns per unit of risk. DB HiTek Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,255,000 in DB HiTek Co on September 13, 2024 and sell it today you would earn a total of 100,000 from holding DB HiTek Co or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. DB HiTek Co
Performance |
| Timeline |
| Hyundai Motor |
| DB HiTek |
Hyundai and DB HiTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and DB HiTek
The main advantage of trading using opposite Hyundai and DB HiTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, DB HiTek 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 DB HiTek will offset losses from the drop in DB HiTek's long position.| Hyundai vs. Hyundai Motor Co | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
| DB HiTek vs. KIWI Media Group | DB HiTek vs. Inzi Display CoLtd | DB HiTek vs. Display Tech Co | DB HiTek vs. SAMG Entertainment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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