Correlation Between PREMIER FOODS and Hyundai
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS 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 PREMIER FOODS and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Hyundai Motor, you can compare the effects of market volatilities on PREMIER FOODS 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 PREMIER FOODS with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Hyundai.
Diversification Opportunities for PREMIER FOODS and Hyundai
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PREMIER and Hyundai is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and PREMIER FOODS 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 PREMIER 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 PREMIER FOODS i.e., PREMIER FOODS and Hyundai go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Hyundai
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.62 times more return on investment than Hyundai. However, PREMIER FOODS is 1.6 times less risky than Hyundai. It trades about 0.16 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.0 per unit of risk. If you would invest 224.00 in PREMIER FOODS on September 1, 2024 and sell it today you would earn a total of 12.00 from holding PREMIER FOODS or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Hyundai Motor
Performance |
| Timeline |
| PREMIER FOODS |
| Hyundai Motor |
PREMIER FOODS and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Hyundai
The main advantage of trading using opposite PREMIER FOODS and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS 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.| PREMIER FOODS vs. SIVERS SEMICONDUCTORS AB | PREMIER FOODS vs. Darden Restaurants | PREMIER FOODS vs. Reliance Steel Aluminum | PREMIER FOODS vs. Q2M Managementberatung AG |
| Hyundai vs. PARKEN Sport Entertainment | Hyundai vs. Magnachip Semiconductor | Hyundai vs. ANTA SPORTS PRODUCT | Hyundai vs. SCIENCE IN SPORT |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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