Correlation Between Hyundai and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both Hyundai and Hotel Shilla 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 Hotel Shilla 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 Hotel Shilla Co, you can compare the effects of market volatilities on Hyundai and Hotel Shilla 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 Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Hotel Shilla.
Diversification Opportunities for Hyundai and Hotel Shilla
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Hotel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of Hyundai i.e., Hyundai and Hotel Shilla go up and down completely randomly.
Pair Corralation between Hyundai and Hotel Shilla
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 1.34 times more return on investment than Hotel Shilla. However, Hyundai is 1.34 times more volatile than Hotel Shilla Co. It trades about 0.1 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.11 per unit of risk. If you would invest 7,121,125 in Hyundai Motor Co on October 10, 2024 and sell it today you would earn a total of 8,448,875 from holding Hyundai Motor Co or generate 118.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Hotel Shilla Co
Performance |
| Timeline |
| Hyundai Motor |
| Hotel Shilla |
Hyundai and Hotel Shilla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Hotel Shilla
The main advantage of trading using opposite Hyundai and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.| Hyundai vs. Daishin Information Communications | Hyundai vs. PJ Metal Co | Hyundai vs. Youngsin Metal Industrial | Hyundai vs. Miwon Chemicals Co |
| Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. LG Energy Solution | Hotel Shilla vs. SK Hynix |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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