Correlation Between Top Material and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Top Material and Hyundai Home 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 Top Material and Hyundai Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Hyundai Home Shopping, you can compare the effects of market volatilities on Top Material and Hyundai Home 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 Top Material with a short position of Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Hyundai Home.
Diversification Opportunities for Top Material and Hyundai Home
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Top and Hyundai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping and Top Material 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 Top Material Co are associated (or correlated) with Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Top Material i.e., Top Material and Hyundai Home go up and down completely randomly.
Pair Corralation between Top Material and Hyundai Home
Assuming the 90 days trading horizon Top Material Co is expected to under-perform the Hyundai Home. In addition to that, Top Material is 1.76 times more volatile than Hyundai Home Shopping. It trades about -0.32 of its total potential returns per unit of risk. Hyundai Home Shopping is currently generating about -0.07 per unit of volatility. If you would invest 4,525,000 in Hyundai Home Shopping on September 12, 2024 and sell it today you would lose (140,000) from holding Hyundai Home Shopping or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Hyundai Home Shopping
Performance |
| Timeline |
| Top Material |
| Hyundai Home Shopping |
Top Material and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Hyundai Home
The main advantage of trading using opposite Top Material and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, Hyundai Home 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 Home will offset losses from the drop in Hyundai Home's long position.| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
| Hyundai Home vs. Samsung Electronics Co | Hyundai Home vs. Samsung Electronics Co | Hyundai Home vs. SK Hynix | Hyundai Home vs. POSCO Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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