Correlation Between Hyundai and Nature
Can any of the company-specific risk be diversified away by investing in both Hyundai and Nature 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 Nature 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 Nature and Environment, you can compare the effects of market volatilities on Hyundai and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Nature.
Diversification Opportunities for Hyundai and Nature
Very weak diversification
The 3 months correlation between Hyundai and Nature is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Hyundai i.e., Hyundai and Nature go up and down completely randomly.
Pair Corralation between Hyundai and Nature
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Nature. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.68 times less risky than Nature. The stock trades about -0.08 of its potential returns per unit of risk. The Nature and Environment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 59,900 in Nature and Environment on August 25, 2024 and sell it today you would lose (500.00) from holding Nature and Environment or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Nature and Environment
Performance |
| Timeline |
| Hyundai Motor |
| Nature and Environment |
Hyundai and Nature Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Nature
The main advantage of trading using opposite Hyundai and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature's long position.| Hyundai vs. Gyeongnam Steel Co | Hyundai vs. LG Household Healthcare | Hyundai vs. Wonil Special Steel | Hyundai vs. Hanil Iron Steel |
| Nature vs. Samsung Electronics Co | Nature vs. Samsung Electronics Co | Nature vs. Hyundai Motor Co | Nature vs. Hyundai Motor |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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