Correlation Between AKITA Drilling and Hyundai
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling 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 AKITA Drilling and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Hyundai Motor Co, you can compare the effects of market volatilities on AKITA Drilling 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 AKITA Drilling with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Hyundai.
Diversification Opportunities for AKITA Drilling and Hyundai
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AKITA and Hyundai is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling i.e., AKITA Drilling and Hyundai go up and down completely randomly.
Pair Corralation between AKITA Drilling and Hyundai
Assuming the 90 days horizon AKITA Drilling is expected to generate 0.81 times more return on investment than Hyundai. However, AKITA Drilling is 1.23 times less risky than Hyundai. It trades about -0.01 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.2 per unit of risk. If you would invest 118.00 in AKITA Drilling on September 13, 2024 and sell it today you would lose (2.00) from holding AKITA Drilling or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
AKITA Drilling vs. Hyundai Motor Co
Performance |
| Timeline |
| AKITA Drilling |
| Hyundai Motor |
AKITA Drilling and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Hyundai
The main advantage of trading using opposite AKITA Drilling and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling 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.| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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