Correlation Between Hyundai and Covalon Technologies
Can any of the company-specific risk be diversified away by investing in both Hyundai and Covalon Technologies 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 Covalon Technologies 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 Covalon Technologies, you can compare the effects of market volatilities on Hyundai and Covalon Technologies 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 Covalon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Covalon Technologies.
Diversification Opportunities for Hyundai and Covalon Technologies
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Covalon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies 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 Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Hyundai i.e., Hyundai and Covalon Technologies go up and down completely randomly.
Pair Corralation between Hyundai and Covalon Technologies
Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Covalon Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 2.0 times less risky than Covalon Technologies. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Covalon Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Covalon Technologies on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Covalon Technologies or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Covalon Technologies
Performance |
| Timeline |
| Hyundai Motor |
| Covalon Technologies |
Hyundai and Covalon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Covalon Technologies
The main advantage of trading using opposite Hyundai and Covalon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Covalon Technologies 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 Covalon Technologies will offset losses from the drop in Covalon Technologies' long position.The idea behind Hyundai Motor Co and Covalon Technologies 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.| Covalon Technologies vs. Biotron Limited | Covalon Technologies vs. biOasis Technologies | Covalon Technologies vs. Mosaic Immunoengineering | Covalon Technologies vs. Cellectis SA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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