Correlation Between Hyundai and Alton Sports
Can any of the company-specific risk be diversified away by investing in both Hyundai and Alton Sports 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 Alton Sports 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 Alton Sports CoLtd, you can compare the effects of market volatilities on Hyundai and Alton Sports 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 Alton Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Alton Sports.
Diversification Opportunities for Hyundai and Alton Sports
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Alton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports CoLtd 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Hyundai i.e., Hyundai and Alton Sports go up and down completely randomly.
Pair Corralation between Hyundai and Alton Sports
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Alton Sports. In addition to that, Hyundai is 1.99 times more volatile than Alton Sports CoLtd. It trades about -0.1 of its total potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.15 per unit of volatility. If you would invest 161,200 in Alton Sports CoLtd on September 2, 2024 and sell it today you would lose (13,100) from holding Alton Sports CoLtd or give up 8.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Alton Sports CoLtd
Performance |
| Timeline |
| Hyundai Motor |
| Alton Sports CoLtd |
Hyundai and Alton Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Alton Sports
The main advantage of trading using opposite Hyundai and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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