Correlation Between Hyundai and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Hyundai and INNOX Advanced 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 INNOX Advanced 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 INNOX Advanced Materials, you can compare the effects of market volatilities on Hyundai and INNOX Advanced 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and INNOX Advanced.
Diversification Opportunities for Hyundai and INNOX Advanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and INNOX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Hyundai i.e., Hyundai and INNOX Advanced go up and down completely randomly.
Pair Corralation between Hyundai and INNOX Advanced
Assuming the 90 days trading horizon Hyundai is expected to generate 17.59 times less return on investment than INNOX Advanced. But when comparing it to its historical volatility, Hyundai Motor Co is 2.96 times less risky than INNOX Advanced. It trades about 0.04 of its potential returns per unit of risk. INNOX Advanced Materials is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,010,000 in INNOX Advanced Materials on November 30, 2024 and sell it today you would earn a total of 825,000 from holding INNOX Advanced Materials or generate 41.04% 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. INNOX Advanced Materials
Performance |
| Timeline |
| Hyundai Motor |
| INNOX Advanced Materials |
Hyundai and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and INNOX Advanced
The main advantage of trading using opposite Hyundai and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Hyundai vs. Jeju Air Co | Hyundai vs. Jin Air Co | Hyundai vs. Sangsin Energy Display | Hyundai vs. INFINITT Healthcare Co |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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