Correlation Between Hyundai and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Hyundai and Busan Ind 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 Busan Ind 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 Busan Ind, you can compare the effects of market volatilities on Hyundai and Busan Ind 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 Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Busan Ind.
Diversification Opportunities for Hyundai and Busan Ind
Pay attention - limited upside
The 3 months correlation between Hyundai and Busan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind 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 Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Hyundai i.e., Hyundai and Busan Ind go up and down completely randomly.
Pair Corralation between Hyundai and Busan Ind
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.75 times more return on investment than Busan Ind. However, Hyundai Motor Co is 1.34 times less risky than Busan Ind. It trades about 0.11 of its potential returns per unit of risk. Busan Ind is currently generating about -0.03 per unit of risk. If you would invest 6,546,245 in Hyundai Motor Co on August 24, 2024 and sell it today you would earn a total of 9,133,755 from holding Hyundai Motor Co or generate 139.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Busan Ind
Performance |
| Timeline |
| Hyundai Motor |
| Busan Ind |
Hyundai and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Busan Ind
The main advantage of trading using opposite Hyundai and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's long position.| Hyundai vs. Hyundai Motor Co | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo |
| Busan Ind vs. Daekyung Machinery Engineering | Busan Ind vs. Shinsegae Engineering Construction | Busan Ind vs. RF Materials Co | Busan Ind vs. Top Material 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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