Correlation Between Hyundai and Critic Clothing
Can any of the company-specific risk be diversified away by investing in both Hyundai and Critic Clothing 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 Critic Clothing 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 Critic Clothing, you can compare the effects of market volatilities on Hyundai and Critic Clothing 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 Critic Clothing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Critic Clothing.
Diversification Opportunities for Hyundai and Critic Clothing
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Critic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Critic Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critic Clothing 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 Critic Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critic Clothing has no effect on the direction of Hyundai i.e., Hyundai and Critic Clothing go up and down completely randomly.
Pair Corralation between Hyundai and Critic Clothing
Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Critic Clothing. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 30.35 times less risky than Critic Clothing. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Critic Clothing is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4.26 in Critic Clothing on August 26, 2024 and sell it today you would earn a total of 3.24 from holding Critic Clothing or generate 76.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Critic Clothing
Performance |
| Timeline |
| Hyundai Motor |
| Critic Clothing |
Hyundai and Critic Clothing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Critic Clothing
The main advantage of trading using opposite Hyundai and Critic Clothing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Critic Clothing 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 Critic Clothing will offset losses from the drop in Critic Clothing's long position.| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Bayerische Motoren Werke | Hyundai vs. Toyota Motor Corp |
| Critic Clothing vs. Ecoloclean Industrs | Critic Clothing vs. Ecosciences | Critic Clothing vs. JPX Global | Critic Clothing vs. Majic Wheels Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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