Correlation Between Hyundai and Aldeyra
Can any of the company-specific risk be diversified away by investing in both Hyundai and Aldeyra 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 Hyundai and Aldeyra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and Aldeyra, you can compare the effects of market volatilities on Hyundai and Aldeyra 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 Hyundai with a short position of Aldeyra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Aldeyra.
Diversification Opportunities for Hyundai and Aldeyra
Poor diversification
The 3 months correlation between Hyundai and Aldeyra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra and Hyundai 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 Hyundai Motor Co are associated (or correlated) with Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of Hyundai i.e., Hyundai and Aldeyra go up and down completely randomly.
Pair Corralation between Hyundai and Aldeyra
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.4 times more return on investment than Aldeyra. However, Hyundai Motor Co is 2.53 times less risky than Aldeyra. It trades about 0.07 of its potential returns per unit of risk. Aldeyra is currently generating about 0.03 per unit of risk. If you would invest 2,749 in Hyundai Motor Co on August 29, 2024 and sell it today you would earn a total of 3,009 from holding Hyundai Motor Co or generate 109.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Aldeyra
Performance |
| Timeline |
| Hyundai Motor |
| Aldeyra |
Hyundai and Aldeyra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Aldeyra
The main advantage of trading using opposite Hyundai and Aldeyra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Aldeyra 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 Aldeyra will offset losses from the drop in Aldeyra's long position.The idea behind Hyundai Motor Co and Aldeyra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aldeyra vs. Tarsus Pharmaceuticals | Aldeyra vs. Travere Therapeutics | Aldeyra vs. Eton Pharmaceuticals | Aldeyra vs. Viridian Therapeutics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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