Correlation Between Hyundai and GreenLight Biosciences
Can any of the company-specific risk be diversified away by investing in both Hyundai and GreenLight Biosciences 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 GreenLight Biosciences 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 GreenLight Biosciences Holdings, you can compare the effects of market volatilities on Hyundai and GreenLight Biosciences 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 GreenLight Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and GreenLight Biosciences.
Diversification Opportunities for Hyundai and GreenLight Biosciences
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and GreenLight is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and GreenLight Biosciences Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenLight Biosciences 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 GreenLight Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenLight Biosciences has no effect on the direction of Hyundai i.e., Hyundai and GreenLight Biosciences go up and down completely randomly.
Pair Corralation between Hyundai and GreenLight Biosciences
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.15 times more return on investment than GreenLight Biosciences. However, Hyundai Motor Co is 6.6 times less risky than GreenLight Biosciences. It trades about 0.07 of its potential returns per unit of risk. GreenLight Biosciences Holdings is currently generating about -0.02 per unit of risk. If you would invest 2,854 in Hyundai Motor Co on August 31, 2024 and sell it today you would earn a total of 2,846 from holding Hyundai Motor Co or generate 99.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.01% |
| Values | Daily Returns |
Hyundai Motor Co vs. GreenLight Biosciences Holding
Performance |
| Timeline |
| Hyundai Motor |
| GreenLight Biosciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hyundai and GreenLight Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and GreenLight Biosciences
The main advantage of trading using opposite Hyundai and GreenLight Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, GreenLight Biosciences 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 GreenLight Biosciences will offset losses from the drop in GreenLight Biosciences' long position.The idea behind Hyundai Motor Co and GreenLight Biosciences Holdings 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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