Correlation Between Hyundai and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Hyundai and Leaders Technology 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 Leaders Technology 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 Leaders Technology Investment, you can compare the effects of market volatilities on Hyundai and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Leaders Technology.
Diversification Opportunities for Hyundai and Leaders Technology
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Leaders is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Hyundai i.e., Hyundai and Leaders Technology go up and down completely randomly.
Pair Corralation between Hyundai and Leaders Technology
Assuming the 90 days trading horizon Hyundai is expected to generate 1.45 times less return on investment than Leaders Technology. But when comparing it to its historical volatility, Hyundai Motor Co is 2.71 times less risky than Leaders Technology. It trades about 0.07 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 29,900 in Leaders Technology Investment on October 14, 2024 and sell it today you would earn a total of 400.00 from holding Leaders Technology Investment or generate 1.34% 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. Leaders Technology Investment
Performance |
| Timeline |
| Hyundai Motor |
| Leaders Technology |
Hyundai and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Leaders Technology
The main advantage of trading using opposite Hyundai and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| Hyundai vs. Hanjoo Light Metal | Hyundai vs. DSC Investment | Hyundai vs. LB Investment | Hyundai vs. Daol Investment Securities |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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