Correlation Between Suntory Beverage and Hyundai
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage 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 Suntory Beverage and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and Hyundai Motor, you can compare the effects of market volatilities on Suntory Beverage 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 Suntory Beverage with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and Hyundai.
Diversification Opportunities for Suntory Beverage and Hyundai
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suntory and Hyundai is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Suntory Beverage 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and Hyundai go up and down completely randomly.
Pair Corralation between Suntory Beverage and Hyundai
Assuming the 90 days horizon Suntory Beverage is expected to generate 18.39 times less return on investment than Hyundai. But when comparing it to its historical volatility, Suntory Beverage Food is 1.27 times less risky than Hyundai. It trades about 0.01 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,522 in Hyundai Motor on September 3, 2024 and sell it today you would earn a total of 2,718 from holding Hyundai Motor or generate 107.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suntory Beverage Food vs. Hyundai Motor
Performance |
| Timeline |
| Suntory Beverage Food |
| Hyundai Motor |
Suntory Beverage and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and Hyundai
The main advantage of trading using opposite Suntory Beverage and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage 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.| Suntory Beverage vs. Sporttotal AG | Suntory Beverage vs. PARKEN Sport Entertainment | Suntory Beverage vs. USWE SPORTS AB | Suntory Beverage vs. EPSILON HEALTHCARE LTD |
| Hyundai vs. COMBA TELECOM SYST | Hyundai vs. Citic Telecom International | Hyundai vs. NetSol Technologies | Hyundai vs. Verizon Communications |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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