Correlation Between FarmStory and Hyundai
Can any of the company-specific risk be diversified away by investing in both FarmStory 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 FarmStory and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and Hyundai Motor Co, you can compare the effects of market volatilities on FarmStory 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 FarmStory with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and Hyundai.
Diversification Opportunities for FarmStory and Hyundai
Poor diversification
The 3 months correlation between FarmStory and Hyundai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory 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 FarmStory 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 FarmStory 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 FarmStory i.e., FarmStory and Hyundai go up and down completely randomly.
Pair Corralation between FarmStory and Hyundai
Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, FarmStory Co is 1.36 times less risky than Hyundai. The stock trades about -0.09 of its potential returns per unit of risk. The Hyundai Motor Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 16,079,900 in Hyundai Motor Co on September 1, 2024 and sell it today you would lose (59,900) from holding Hyundai Motor Co or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarmStory Co vs. Hyundai Motor Co
Performance |
| Timeline |
| FarmStory |
| Hyundai Motor |
FarmStory and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and Hyundai
The main advantage of trading using opposite FarmStory and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory 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.| FarmStory vs. Korea Real Estate | FarmStory vs. Korea Ratings Co | FarmStory vs. IQuest Co | FarmStory vs. Wonbang Tech Co |
| Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind | Hyundai vs. Mirae Asset Daewoo | Hyundai vs. Shinhan WTI Futures |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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