Correlation Between FNSTech and Hyundai
Can any of the company-specific risk be diversified away by investing in both FNSTech 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 FNSTech and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and Hyundai Motor Co, you can compare the effects of market volatilities on FNSTech 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 FNSTech with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and Hyundai.
Diversification Opportunities for FNSTech and Hyundai
Very weak diversification
The 3 months correlation between FNSTech and Hyundai is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech 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 FNSTech 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 FNSTech 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 FNSTech i.e., FNSTech and Hyundai go up and down completely randomly.
Pair Corralation between FNSTech and Hyundai
Assuming the 90 days trading horizon FNSTech Co is expected to generate 3.09 times more return on investment than Hyundai. However, FNSTech is 3.09 times more volatile than Hyundai Motor Co. It trades about 0.23 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.15 per unit of risk. If you would invest 843,000 in FNSTech Co on November 7, 2024 and sell it today you would earn a total of 168,000 from holding FNSTech Co or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. Hyundai Motor Co
Performance |
| Timeline |
| FNSTech |
| Hyundai Motor |
FNSTech and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and Hyundai
The main advantage of trading using opposite FNSTech and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech 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.| FNSTech vs. Daechang Steel Co | FNSTech vs. Insun Environment New | FNSTech vs. Wonil Special Steel | FNSTech vs. Finebesteel |
| Hyundai vs. UJU Electronics Co | Hyundai vs. NH Investment Securities | Hyundai vs. Samji Electronics Co | Hyundai vs. TS Investment Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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