Correlation Between Hyundai Green and Organic Tea
Can any of the company-specific risk be diversified away by investing in both Hyundai Green and Organic Tea 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 Hyundai Green and Organic Tea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Green Food and Organic Tea Cosmetics, you can compare the effects of market volatilities on Hyundai Green and Organic Tea 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 Hyundai Green with a short position of Organic Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Green and Organic Tea.
Diversification Opportunities for Hyundai Green and Organic Tea
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Organic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Green Food and Organic Tea Cosmetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Tea Cosmetics and Hyundai Green 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 Hyundai Green Food are associated (or correlated) with Organic Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Tea Cosmetics has no effect on the direction of Hyundai Green i.e., Hyundai Green and Organic Tea go up and down completely randomly.
Pair Corralation between Hyundai Green and Organic Tea
Assuming the 90 days trading horizon Hyundai Green is expected to generate 31.01 times less return on investment than Organic Tea. But when comparing it to its historical volatility, Hyundai Green Food is 45.7 times less risky than Organic Tea. It trades about 0.09 of its potential returns per unit of risk. Organic Tea Cosmetics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,800 in Organic Tea Cosmetics on September 12, 2024 and sell it today you would earn a total of 40,200 from holding Organic Tea Cosmetics or generate 340.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Hyundai Green Food vs. Organic Tea Cosmetics
Performance |
| Timeline |
| Hyundai Green Food |
| Organic Tea Cosmetics |
Hyundai Green and Organic Tea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Green and Organic Tea
The main advantage of trading using opposite Hyundai Green and Organic Tea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Green position performs unexpectedly, Organic Tea 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 Organic Tea will offset losses from the drop in Organic Tea's long position.| Hyundai Green vs. KT Submarine Telecom | Hyundai Green vs. ECSTELECOM Co | Hyundai Green vs. Seoul Electronics Telecom | Hyundai Green vs. Sejong Telecom |
| Organic Tea vs. Hyosung Advanced Materials | Organic Tea vs. Hana Materials | Organic Tea vs. Nice Information Telecommunication | Organic Tea vs. Shinsegae Information Communication |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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