Correlation Between Hyundai and Star Royalties
Can any of the company-specific risk be diversified away by investing in both Hyundai and Star Royalties 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 Star Royalties 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 Star Royalties, you can compare the effects of market volatilities on Hyundai and Star Royalties 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 Star Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Star Royalties.
Diversification Opportunities for Hyundai and Star Royalties
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Star is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Star Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Royalties 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 Star Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Royalties has no effect on the direction of Hyundai i.e., Hyundai and Star Royalties go up and down completely randomly.
Pair Corralation between Hyundai and Star Royalties
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.65 times more return on investment than Star Royalties. However, Hyundai Motor Co is 1.55 times less risky than Star Royalties. It trades about -0.05 of its potential returns per unit of risk. Star Royalties is currently generating about -0.12 per unit of risk. If you would invest 5,834 in Hyundai Motor Co on August 31, 2024 and sell it today you would lose (134.00) from holding Hyundai Motor Co or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Star Royalties
Performance |
| Timeline |
| Hyundai Motor |
| Star Royalties |
Hyundai and Star Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Star Royalties
The main advantage of trading using opposite Hyundai and Star Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Star Royalties 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 Star Royalties will offset losses from the drop in Star Royalties' long position.The idea behind Hyundai Motor Co and Star Royalties 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.| Star Royalties vs. Gemfields Group Limited | Star Royalties vs. Defiance Silver Corp | Star Royalties vs. Diamond Fields Resources | Star Royalties vs. GoGold Resources |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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