Correlation Between Hyundai and HYUNDAI BIOLAND
Can any of the company-specific risk be diversified away by investing in both Hyundai and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND 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 HYUNDAI BIOLAND CoLtd, you can compare the effects of market volatilities on Hyundai and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and HYUNDAI BIOLAND.
Diversification Opportunities for Hyundai and HYUNDAI BIOLAND
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and HYUNDAI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and HYUNDAI BIOLAND CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYUNDAI BIOLAND CoLtd 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 HYUNDAI BIOLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYUNDAI BIOLAND CoLtd has no effect on the direction of Hyundai i.e., Hyundai and HYUNDAI BIOLAND go up and down completely randomly.
Pair Corralation between Hyundai and HYUNDAI BIOLAND
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.64 times more return on investment than HYUNDAI BIOLAND. However, Hyundai Motor Co is 1.56 times less risky than HYUNDAI BIOLAND. It trades about -0.18 of its potential returns per unit of risk. HYUNDAI BIOLAND CoLtd is currently generating about -0.25 per unit of risk. If you would invest 17,593,400 in Hyundai Motor Co on August 25, 2024 and sell it today you would lose (1,903,400) from holding Hyundai Motor Co or give up 10.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. HYUNDAI BIOLAND CoLtd
Performance |
| Timeline |
| Hyundai Motor |
| HYUNDAI BIOLAND CoLtd |
Hyundai and HYUNDAI BIOLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and HYUNDAI BIOLAND
The main advantage of trading using opposite Hyundai and HYUNDAI BIOLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, HYUNDAI BIOLAND 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 HYUNDAI BIOLAND will offset losses from the drop in HYUNDAI BIOLAND's long position.| Hyundai vs. Hyundai Motor Co | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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