Correlation Between Hyundai and Biostage
Can any of the company-specific risk be diversified away by investing in both Hyundai and Biostage 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 Biostage 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 Biostage, you can compare the effects of market volatilities on Hyundai and Biostage 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 Biostage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Biostage.
Diversification Opportunities for Hyundai and Biostage
Very poor diversification
The 3 months correlation between Hyundai and Biostage is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Biostage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostage 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 Biostage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostage has no effect on the direction of Hyundai i.e., Hyundai and Biostage go up and down completely randomly.
Pair Corralation between Hyundai and Biostage
If you would invest 420.00 in Biostage on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Biostage or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Hyundai Motor Co vs. Biostage
Performance |
| Timeline |
| Hyundai Motor |
| Biostage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hyundai and Biostage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Biostage
The main advantage of trading using opposite Hyundai and Biostage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Biostage 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 Biostage will offset losses from the drop in Biostage's long position.The idea behind Hyundai Motor Co and Biostage 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.| Biostage vs. Biotron Limited | Biostage vs. biOasis Technologies | Biostage vs. Covalon Technologies | Biostage vs. Mosaic Immunoengineering |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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