Correlation Between Total Soft and Hyundai
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and Hyundai Motor, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Hyundai.
Diversification Opportunities for Total Soft and Hyundai
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Total and Hyundai is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and Hyundai go up and down completely randomly.
Pair Corralation between Total Soft and Hyundai
Assuming the 90 days trading horizon Total Soft is expected to generate 1.72 times less return on investment than Hyundai. In addition to that, Total Soft is 1.55 times more volatile than Hyundai Motor. It trades about 0.02 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.05 per unit of volatility. If you would invest 14,251,500 in Hyundai Motor on September 3, 2024 and sell it today you would earn a total of 7,598,500 from holding Hyundai Motor or generate 53.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. Hyundai Motor
Performance |
| Timeline |
| Total Soft Bank |
| Hyundai Motor |
Total Soft and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and Hyundai
The main advantage of trading using opposite Total Soft and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Hanmi Semiconductor Co | Total Soft vs. Iljin Display | Total Soft vs. Dongbang Transport Logistics | Total Soft vs. Daol Investment Securities |
| Hyundai vs. Dongbu Insurance Co | Hyundai vs. Okins Electronics Co | Hyundai vs. Total Soft Bank | Hyundai vs. Samji Electronics Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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