Correlation Between Hyundai and Dr Ing
Can any of the company-specific risk be diversified away by investing in both Hyundai and Dr Ing 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 Dr Ing 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 Dr Ing hc, you can compare the effects of market volatilities on Hyundai and Dr Ing 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 Dr Ing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Dr Ing.
Diversification Opportunities for Hyundai and Dr Ing
Poor diversification
The 3 months correlation between Hyundai and DRPRF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Dr Ing hc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Ing hc 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 Dr Ing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Ing hc has no effect on the direction of Hyundai i.e., Hyundai and Dr Ing go up and down completely randomly.
Pair Corralation between Hyundai and Dr Ing
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.52 times more return on investment than Dr Ing. However, Hyundai Motor Co is 1.91 times less risky than Dr Ing. It trades about -0.09 of its potential returns per unit of risk. Dr Ing hc is currently generating about -0.2 per unit of risk. If you would invest 5,883 in Hyundai Motor Co on August 29, 2024 and sell it today you would lose (208.00) from holding Hyundai Motor Co or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Dr Ing hc
Performance |
| Timeline |
| Hyundai Motor |
| Dr Ing hc |
Hyundai and Dr Ing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Dr Ing
The main advantage of trading using opposite Hyundai and Dr Ing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Dr Ing 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 Dr Ing will offset losses from the drop in Dr Ing's long position.| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Toyota Motor Corp | Hyundai vs. Porsche Automobile Holding |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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