Correlation Between Hyundai and Vector
Can any of the company-specific risk be diversified away by investing in both Hyundai and Vector 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 Vector 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 Vector Group, you can compare the effects of market volatilities on Hyundai and Vector 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 Vector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Vector.
Diversification Opportunities for Hyundai and Vector
Pay attention - limited upside
The 3 months correlation between Hyundai and Vector is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Vector Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vector Group 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 Vector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vector Group has no effect on the direction of Hyundai i.e., Hyundai and Vector go up and down completely randomly.
Pair Corralation between Hyundai and Vector
Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Vector. In addition to that, Hyundai is 13.07 times more volatile than Vector Group. It trades about -0.04 of its total potential returns per unit of risk. Vector Group is currently generating about -0.03 per unit of volatility. If you would invest 1,501 in Vector Group on November 2, 2024 and sell it today you would lose (2.00) from holding Vector Group or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 25.24% |
| Values | Daily Returns |
Hyundai Motor Co vs. Vector Group
Performance |
| Timeline |
| Hyundai Motor |
| Vector Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hyundai and Vector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Vector
The main advantage of trading using opposite Hyundai and Vector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Vector 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 Vector will offset losses from the drop in Vector's long position.The idea behind Hyundai Motor Co and Vector Group 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.| Vector vs. Universal | Vector vs. Imperial Brands PLC | Vector vs. Japan Tobacco ADR | Vector vs. Philip Morris International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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