Correlation Between Hyundai and Jeju Air
Can any of the company-specific risk be diversified away by investing in both Hyundai and Jeju Air 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 Jeju Air 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 Jeju Air Co, you can compare the effects of market volatilities on Hyundai and Jeju Air 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 Jeju Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Jeju Air.
Diversification Opportunities for Hyundai and Jeju Air
Very good diversification
The 3 months correlation between Hyundai and Jeju is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Jeju Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Air 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 Jeju Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Air has no effect on the direction of Hyundai i.e., Hyundai and Jeju Air go up and down completely randomly.
Pair Corralation between Hyundai and Jeju Air
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.97 times more return on investment than Jeju Air. However, Hyundai Motor Co is 1.04 times less risky than Jeju Air. It trades about 0.08 of its potential returns per unit of risk. Jeju Air Co is currently generating about -0.03 per unit of risk. If you would invest 9,515,526 in Hyundai Motor Co on September 4, 2024 and sell it today you would earn a total of 6,074,474 from holding Hyundai Motor Co or generate 63.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Jeju Air Co
Performance |
| Timeline |
| Hyundai Motor |
| Jeju Air |
Hyundai and Jeju Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Jeju Air
The main advantage of trading using opposite Hyundai and Jeju Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Jeju Air 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 Jeju Air will offset losses from the drop in Jeju Air's long position.The idea behind Hyundai Motor Co and Jeju Air Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Jeju Air vs. LG Display | Jeju Air vs. Hyundai Motor | Jeju Air vs. Hyundai Motor Co | Jeju Air vs. Hyundai Motor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |