Correlation Between AmeraMex International and Hyundai
Can any of the company-specific risk be diversified away by investing in both AmeraMex International 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 AmeraMex International and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Hyundai Motor Co, you can compare the effects of market volatilities on AmeraMex International 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 AmeraMex International with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Hyundai.
Diversification Opportunities for AmeraMex International and Hyundai
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between AmeraMex and Hyundai is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and AmeraMex International 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 AmeraMex International 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 AmeraMex International i.e., AmeraMex International and Hyundai go up and down completely randomly.
Pair Corralation between AmeraMex International and Hyundai
Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Hyundai. In addition to that, AmeraMex International is 2.73 times more volatile than Hyundai Motor Co. It trades about -0.06 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.01 per unit of volatility. If you would invest 5,500 in Hyundai Motor Co on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Hyundai Motor Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Hyundai Motor Co
Performance |
| Timeline |
| AmeraMex International |
| Hyundai Motor |
AmeraMex International and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Hyundai
The main advantage of trading using opposite AmeraMex International and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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.| AmeraMex International vs. First Tractor | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. American Premium Water |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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