Correlation Between BAIC MotorLimited and Hyundai
Can any of the company-specific risk be diversified away by investing in both BAIC MotorLimited 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 BAIC MotorLimited and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAIC Motor and Hyundai Motor Co, you can compare the effects of market volatilities on BAIC MotorLimited 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 BAIC MotorLimited with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIC MotorLimited and Hyundai.
Diversification Opportunities for BAIC MotorLimited and Hyundai
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BAIC and Hyundai is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BAIC Motor and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and BAIC MotorLimited 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 BAIC Motor 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 BAIC MotorLimited i.e., BAIC MotorLimited and Hyundai go up and down completely randomly.
Pair Corralation between BAIC MotorLimited and Hyundai
Assuming the 90 days horizon BAIC MotorLimited is expected to generate 2.45 times less return on investment than Hyundai. In addition to that, BAIC MotorLimited is 1.4 times more volatile than Hyundai Motor Co. It trades about 0.02 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.07 per unit of volatility. If you would invest 3,789 in Hyundai Motor Co on September 2, 2024 and sell it today you would earn a total of 1,792 from holding Hyundai Motor Co or generate 47.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BAIC Motor vs. Hyundai Motor Co
Performance |
| Timeline |
| BAIC MotorLimited |
| Hyundai Motor |
BAIC MotorLimited and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAIC MotorLimited and Hyundai
The main advantage of trading using opposite BAIC MotorLimited and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIC MotorLimited 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.| BAIC MotorLimited vs. Zapp Electric Vehicles | BAIC MotorLimited vs. First Hydrogen Corp | BAIC MotorLimited vs. Guangzhou Automobile Group | BAIC MotorLimited vs. Phoenix Motor Common |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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