Correlation Between MEDICOX and Hyundai
Can any of the company-specific risk be diversified away by investing in both MEDICOX 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 MEDICOX and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICOX Co and Hyundai Motor, you can compare the effects of market volatilities on MEDICOX 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 MEDICOX with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICOX and Hyundai.
Diversification Opportunities for MEDICOX and Hyundai
Poor diversification
The 3 months correlation between MEDICOX and Hyundai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MEDICOX Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and MEDICOX 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 MEDICOX 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 MEDICOX i.e., MEDICOX and Hyundai go up and down completely randomly.
Pair Corralation between MEDICOX and Hyundai
Assuming the 90 days trading horizon MEDICOX Co is expected to under-perform the Hyundai. In addition to that, MEDICOX is 4.42 times more volatile than Hyundai Motor. It trades about -0.06 of its total potential returns per unit of risk. Hyundai Motor is currently generating about -0.15 per unit of volatility. If you would invest 21,938,500 in Hyundai Motor on December 11, 2024 and sell it today you would lose (2,198,500) from holding Hyundai Motor or give up 10.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICOX Co vs. Hyundai Motor
Performance |
| Timeline |
| MEDICOX |
| Hyundai Motor |
MEDICOX and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICOX and Hyundai
The main advantage of trading using opposite MEDICOX and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICOX 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.| MEDICOX vs. Digital Multimedia Technology | MEDICOX vs. SK Chemicals Co | MEDICOX vs. Alton Sports CoLtd | MEDICOX vs. Kukdong Oil Chemicals |
| Hyundai vs. Iljin Materials Co | Hyundai vs. INNOX Advanced Materials | Hyundai vs. Handok Clean Tech | Hyundai vs. Korea Alcohol Industrial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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