Correlation Between Hyundai and Quantgate Systems
Can any of the company-specific risk be diversified away by investing in both Hyundai and Quantgate Systems 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 Quantgate Systems 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 Quantgate Systems, you can compare the effects of market volatilities on Hyundai and Quantgate Systems 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 Quantgate Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Quantgate Systems.
Diversification Opportunities for Hyundai and Quantgate Systems
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Quantgate is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Quantgate Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantgate Systems 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 Quantgate Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantgate Systems has no effect on the direction of Hyundai i.e., Hyundai and Quantgate Systems go up and down completely randomly.
Pair Corralation between Hyundai and Quantgate Systems
Assuming the 90 days horizon Hyundai is expected to generate 4.56 times less return on investment than Quantgate Systems. But when comparing it to its historical volatility, Hyundai Motor Co is 6.41 times less risky than Quantgate Systems. It trades about 0.07 of its potential returns per unit of risk. Quantgate Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Quantgate Systems on September 4, 2024 and sell it today you would lose (4.20) from holding Quantgate Systems or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hyundai Motor Co vs. Quantgate Systems
Performance |
| Timeline |
| Hyundai Motor |
| Quantgate Systems |
Hyundai and Quantgate Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Quantgate Systems
The main advantage of trading using opposite Hyundai and Quantgate Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Quantgate Systems 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 Quantgate Systems will offset losses from the drop in Quantgate Systems' long position.The idea behind Hyundai Motor Co and Quantgate Systems 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.| Quantgate Systems vs. Salesforce | Quantgate Systems vs. SAP SE ADR | Quantgate Systems vs. ServiceNow | Quantgate Systems vs. Intuit Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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