Correlation Between Hyundai and Humax
Can any of the company-specific risk be diversified away by investing in both Hyundai and Humax 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 Humax 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 Humax Co, you can compare the effects of market volatilities on Hyundai and Humax 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 Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Humax.
Diversification Opportunities for Hyundai and Humax
Poor diversification
The 3 months correlation between Hyundai and Humax is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax 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 Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of Hyundai i.e., Hyundai and Humax go up and down completely randomly.
Pair Corralation between Hyundai and Humax
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.61 times more return on investment than Humax. However, Hyundai Motor Co is 1.64 times less risky than Humax. It trades about -0.15 of its potential returns per unit of risk. Humax Co is currently generating about -0.42 per unit of risk. If you would invest 17,370,000 in Hyundai Motor Co on September 13, 2024 and sell it today you would lose (1,780,000) from holding Hyundai Motor Co or give up 10.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Hyundai Motor Co vs. Humax Co
Performance |
| Timeline |
| Hyundai Motor |
| Humax |
Hyundai and Humax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Humax
The main advantage of trading using opposite Hyundai and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax's long position.| Hyundai vs. Hyundai Motor Co | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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