Correlation Between Cleveland Cliffs and Hyundai
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs 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 Cleveland Cliffs and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Hyundai Motor, you can compare the effects of market volatilities on Cleveland Cliffs 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 Cleveland Cliffs with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Hyundai.
Diversification Opportunities for Cleveland Cliffs and Hyundai
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cleveland and Hyundai is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs i.e., Cleveland Cliffs and Hyundai go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Hyundai
Assuming the 90 days trading horizon Cleveland Cliffs is expected to under-perform the Hyundai. In addition to that, Cleveland Cliffs is 1.25 times more volatile than Hyundai Motor. It trades about -0.36 of its total potential returns per unit of risk. Hyundai Motor is currently generating about -0.08 per unit of volatility. If you would invest 5,400 in Hyundai Motor on October 7, 2024 and sell it today you would lose (120.00) from holding Hyundai Motor or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Cleveland Cliffs vs. Hyundai Motor
Performance |
| Timeline |
| Cleveland Cliffs |
| Hyundai Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cleveland Cliffs and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Hyundai
The main advantage of trading using opposite Cleveland Cliffs and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs 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.| Cleveland Cliffs vs. Vitec Software Group | Cleveland Cliffs vs. Prosiebensat 1 Media | Cleveland Cliffs vs. Liberty Media Corp | Cleveland Cliffs vs. Ubisoft Entertainment |
| Hyundai vs. EVS Broadcast Equipment | Hyundai vs. Herald Investment Trust | Hyundai vs. Melia Hotels | Hyundai vs. Gaztransport et Technigaz |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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