Correlation Between Hyundai and BAIC MotorLimited
Can any of the company-specific risk be diversified away by investing in both Hyundai and BAIC MotorLimited 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 BAIC MotorLimited 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 BAIC Motor, you can compare the effects of market volatilities on Hyundai and BAIC MotorLimited 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 BAIC MotorLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and BAIC MotorLimited.
Diversification Opportunities for Hyundai and BAIC MotorLimited
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and BAIC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and BAIC Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIC MotorLimited 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 BAIC MotorLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIC MotorLimited has no effect on the direction of Hyundai i.e., Hyundai and BAIC MotorLimited go up and down completely randomly.
Pair Corralation between Hyundai and BAIC MotorLimited
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.71 times more return on investment than BAIC MotorLimited. However, Hyundai Motor Co is 1.4 times less risky than BAIC MotorLimited. It trades about 0.07 of its potential returns per unit of risk. BAIC Motor is currently generating about 0.02 per unit of risk. 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 |
Hyundai Motor Co vs. BAIC Motor
Performance |
| Timeline |
| Hyundai Motor |
| BAIC MotorLimited |
Hyundai and BAIC MotorLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and BAIC MotorLimited
The main advantage of trading using opposite Hyundai and BAIC MotorLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, BAIC MotorLimited 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 BAIC MotorLimited will offset losses from the drop in BAIC MotorLimited's long position.The idea behind Hyundai Motor Co and BAIC Motor 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.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |