Correlation Between Hyundai and Wider Planet
Can any of the company-specific risk be diversified away by investing in both Hyundai and Wider Planet 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 Wider Planet 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 Wider Planet, you can compare the effects of market volatilities on Hyundai and Wider Planet 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 Wider Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Wider Planet.
Diversification Opportunities for Hyundai and Wider Planet
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Wider is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Wider Planet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wider Planet 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 Wider Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wider Planet has no effect on the direction of Hyundai i.e., Hyundai and Wider Planet go up and down completely randomly.
Pair Corralation between Hyundai and Wider Planet
Assuming the 90 days trading horizon Hyundai is expected to generate 1.95 times less return on investment than Wider Planet. But when comparing it to its historical volatility, Hyundai Motor Co is 3.08 times less risky than Wider Planet. It trades about 0.11 of its potential returns per unit of risk. Wider Planet is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 579,000 in Wider Planet on September 4, 2024 and sell it today you would earn a total of 1,211,000 from holding Wider Planet or generate 209.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Hyundai Motor Co vs. Wider Planet
Performance |
| Timeline |
| Hyundai Motor |
| Wider Planet |
Hyundai and Wider Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Wider Planet
The main advantage of trading using opposite Hyundai and Wider Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Wider Planet 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 Wider Planet will offset losses from the drop in Wider Planet's long position.The idea behind Hyundai Motor Co and Wider Planet 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.| Wider Planet vs. RF Materials Co | Wider Planet vs. Phoenix Materials Co | Wider Planet vs. Top Material Co | Wider Planet vs. Lotte Data Communication |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |