Correlation Between Solution Advanced and Hyundai
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Hyundai Motor Co, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Hyundai.
Diversification Opportunities for Solution Advanced and Hyundai
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solution and Hyundai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Hyundai go up and down completely randomly.
Pair Corralation between Solution Advanced and Hyundai
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.71 times more return on investment than Hyundai. However, Solution Advanced is 1.71 times more volatile than Hyundai Motor Co. It trades about 0.09 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.01 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 8,100 from holding Solution Advanced Technology or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Hyundai Motor Co
Performance |
| Timeline |
| Solution Advanced |
| Hyundai Motor |
Solution Advanced and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Hyundai
The main advantage of trading using opposite Solution Advanced and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Hyundai vs. Hyundai Motor Co | Hyundai vs. Solution Advanced Technology | Hyundai vs. Busan Industrial Co | Hyundai vs. Busan Ind |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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