Correlation Between GS Retail and Hyundai
Can any of the company-specific risk be diversified away by investing in both GS Retail and Hyundai 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 GS Retail and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Retail Co and Hyundai Motor Co, you can compare the effects of market volatilities on GS Retail and Hyundai 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 GS Retail with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and Hyundai.
Diversification Opportunities for GS Retail and Hyundai
Modest diversification
The 3 months correlation between 007070 and Hyundai is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and GS Retail 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 GS Retail Co are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of GS Retail i.e., GS Retail and Hyundai go up and down completely randomly.
Pair Corralation between GS Retail and Hyundai
Assuming the 90 days trading horizon GS Retail is expected to generate 16.24 times less return on investment than Hyundai. But when comparing it to its historical volatility, GS Retail Co is 1.33 times less risky than Hyundai. It trades about 0.01 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,976,129 in Hyundai Motor Co on September 3, 2024 and sell it today you would earn a total of 6,043,871 from holding Hyundai Motor Co or generate 60.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
GS Retail Co vs. Hyundai Motor Co
Performance |
| Timeline |
| GS Retail |
| Hyundai Motor |
GS Retail and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and Hyundai
The main advantage of trading using opposite GS Retail and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail position performs unexpectedly, Hyundai 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 will offset losses from the drop in Hyundai's long position.| GS Retail vs. CU Medical Systems | GS Retail vs. Daejung Chemicals Metals | GS Retail vs. Alton Sports CoLtd | GS Retail vs. Hannong Chemicals |
| Hyundai vs. Kaonmedia Co | Hyundai vs. GS Retail Co | Hyundai vs. TK Chemical | Hyundai vs. Next Entertainment World |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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