Correlation Between Hyundai and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Hyundai and Hyundai Heavy 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 Hyundai Heavy 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 Hyundai Heavy Industries, you can compare the effects of market volatilities on Hyundai and Hyundai Heavy 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 Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Hyundai Heavy.
Diversification Opportunities for Hyundai and Hyundai Heavy
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Hyundai is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries 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 Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Hyundai i.e., Hyundai and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Hyundai and Hyundai Heavy
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.68 times more return on investment than Hyundai Heavy. However, Hyundai Motor Co is 1.48 times less risky than Hyundai Heavy. It trades about 0.11 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about 0.06 per unit of risk. If you would invest 6,472,415 in Hyundai Motor Co on September 3, 2024 and sell it today you would earn a total of 9,227,585 from holding Hyundai Motor Co or generate 142.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Hyundai Motor |
| Hyundai Heavy Industries |
Hyundai and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Hyundai Heavy
The main advantage of trading using opposite Hyundai and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Hyundai Heavy 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 Hyundai Heavy will offset losses from the drop in Hyundai Heavy's long position.| Hyundai vs. NewFlex Technology Co | Hyundai vs. KG Eco Technology | Hyundai vs. Solution Advanced Technology | Hyundai vs. iNtRON Biotechnology |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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