Correlation Between Associated British and Hyundai
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Hyundai Motor, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Hyundai.
Diversification Opportunities for Associated British and Hyundai
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Hyundai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Hyundai go up and down completely randomly.
Pair Corralation between Associated British and Hyundai
Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.54 times more return on investment than Hyundai. However, Associated British Foods is 1.86 times less risky than Hyundai. It trades about -0.14 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.13 per unit of risk. If you would invest 212,911 in Associated British Foods on September 22, 2024 and sell it today you would lose (7,511) from holding Associated British Foods or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Associated British Foods vs. Hyundai Motor
Performance |
| Timeline |
| Associated British Foods |
| Hyundai Motor |
Associated British and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Hyundai
The main advantage of trading using opposite Associated British and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
| Hyundai vs. Neometals | Hyundai vs. AfriTin Mining | Hyundai vs. Tata Steel Limited | Hyundai vs. Associated British Foods |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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