Correlation Between Benchmark Electronics and Hyundai
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics 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 Benchmark Electronics and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Hyundai Motor, you can compare the effects of market volatilities on Benchmark Electronics 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 Benchmark Electronics with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Hyundai.
Diversification Opportunities for Benchmark Electronics and Hyundai
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Benchmark and Hyundai is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Benchmark Electronics 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 Benchmark Electronics 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 Benchmark Electronics i.e., Benchmark Electronics and Hyundai go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Hyundai
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.62 times more return on investment than Hyundai. However, Benchmark Electronics is 1.62 times more volatile than Hyundai Motor. It trades about 0.13 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.02 per unit of risk. If you would invest 4,160 in Benchmark Electronics on August 31, 2024 and sell it today you would earn a total of 380.00 from holding Benchmark Electronics or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Benchmark Electronics vs. Hyundai Motor
Performance |
| Timeline |
| Benchmark Electronics |
| Hyundai Motor |
Benchmark Electronics and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Hyundai
The main advantage of trading using opposite Benchmark Electronics and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics 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.| Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. Superior Plus Corp | Benchmark Electronics vs. NMI Holdings | Benchmark Electronics vs. Origin Agritech |
| Hyundai vs. CAREER EDUCATION | Hyundai vs. CSSC Offshore Marine | Hyundai vs. Benchmark Electronics | Hyundai vs. TAL Education Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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