Correlation Between Hyundai and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both Hyundai and YG Entertainment 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 YG Entertainment 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 YG Entertainment, you can compare the effects of market volatilities on Hyundai and YG Entertainment 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 YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and YG Entertainment.
Diversification Opportunities for Hyundai and YG Entertainment
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and 122870 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment 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 YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Hyundai i.e., Hyundai and YG Entertainment go up and down completely randomly.
Pair Corralation between Hyundai and YG Entertainment
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.59 times more return on investment than YG Entertainment. However, Hyundai Motor Co is 1.7 times less risky than YG Entertainment. It trades about 0.11 of its potential returns per unit of risk. YG Entertainment is currently generating about 0.01 per unit of risk. If you would invest 6,837,345 in Hyundai Motor Co on August 28, 2024 and sell it today you would earn a total of 8,902,655 from holding Hyundai Motor Co or generate 130.21% 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. YG Entertainment
Performance |
| Timeline |
| Hyundai Motor |
| YG Entertainment |
Hyundai and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and YG Entertainment
The main advantage of trading using opposite Hyundai and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, YG Entertainment 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| Hyundai vs. Iljin Display | Hyundai vs. Korea Air Svc | Hyundai vs. BIT Computer Co | Hyundai vs. Osang Healthcare Co,Ltd |
| YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. LG Energy Solution | YG Entertainment vs. SK Hynix |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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