Correlation Between Hyundai and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Hyundai and Volkswagen 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 Volkswagen 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 Volkswagen AG 110, you can compare the effects of market volatilities on Hyundai and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Volkswagen.
Diversification Opportunities for Hyundai and Volkswagen
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Volkswagen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG 110 has no effect on the direction of Hyundai i.e., Hyundai and Volkswagen go up and down completely randomly.
Pair Corralation between Hyundai and Volkswagen
Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.63 times more return on investment than Volkswagen. However, Hyundai Motor Co is 1.59 times less risky than Volkswagen. It trades about -0.23 of its potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.34 per unit of risk. If you would invest 5,883 in Hyundai Motor Co on August 28, 2024 and sell it today you would lose (408.00) from holding Hyundai Motor Co or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hyundai Motor Co vs. Volkswagen AG 110
Performance |
| Timeline |
| Hyundai Motor |
| Volkswagen AG 110 |
Hyundai and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Volkswagen
The main advantage of trading using opposite Hyundai and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Toyota Motor Corp | Hyundai vs. Porsche Automobile Holding |
| Volkswagen vs. FitLife Brands, Common | Volkswagen vs. HUMANA INC | Volkswagen vs. SCOR PK | Volkswagen vs. Aquagold 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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