Correlation Between Hyundai and Mazda
Can any of the company-specific risk be diversified away by investing in both Hyundai and Mazda 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 Mazda 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 Mazda Motor Corp, you can compare the effects of market volatilities on Hyundai and Mazda 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 Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Mazda.
Diversification Opportunities for Hyundai and Mazda
Poor diversification
The 3 months correlation between Hyundai and Mazda is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Mazda Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor Corp 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor Corp has no effect on the direction of Hyundai i.e., Hyundai and Mazda go up and down completely randomly.
Pair Corralation between Hyundai and Mazda
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 1.24 times more return on investment than Mazda. However, Hyundai is 1.24 times more volatile than Mazda Motor Corp. It trades about -0.1 of its potential returns per unit of risk. Mazda Motor Corp is currently generating about -0.19 per unit of risk. If you would invest 6,465 in Hyundai Motor Co on August 28, 2024 and sell it today you would lose (990.00) from holding Hyundai Motor Co or give up 15.31% 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. Mazda Motor Corp
Performance |
| Timeline |
| Hyundai Motor |
| Mazda Motor Corp |
Hyundai and Mazda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Mazda
The main advantage of trading using opposite Hyundai and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda's long position.| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Toyota Motor Corp | Hyundai vs. Porsche Automobile Holding |
| Mazda vs. Isuzu Motors | Mazda vs. Renault SA | Mazda vs. Toyota Motor Corp | Mazda 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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