Correlation Between Hyundai and EURODRY
Can any of the company-specific risk be diversified away by investing in both Hyundai and EURODRY 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 EURODRY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and EURODRY LTD DL, you can compare the effects of market volatilities on Hyundai and EURODRY 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 EURODRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and EURODRY.
Diversification Opportunities for Hyundai and EURODRY
Very poor diversification
The 3 months correlation between Hyundai and EURODRY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and EURODRY LTD DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURODRY LTD DL 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 are associated (or correlated) with EURODRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURODRY LTD DL has no effect on the direction of Hyundai i.e., Hyundai and EURODRY go up and down completely randomly.
Pair Corralation between Hyundai and EURODRY
Assuming the 90 days horizon Hyundai Motor is expected to generate 1.13 times more return on investment than EURODRY. However, Hyundai is 1.13 times more volatile than EURODRY LTD DL. It trades about 0.08 of its potential returns per unit of risk. EURODRY LTD DL is currently generating about -0.01 per unit of risk. If you would invest 2,573 in Hyundai Motor on August 26, 2024 and sell it today you would earn a total of 2,727 from holding Hyundai Motor or generate 105.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. EURODRY LTD DL
Performance |
| Timeline |
| Hyundai Motor |
| EURODRY LTD DL |
Hyundai and EURODRY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and EURODRY
The main advantage of trading using opposite Hyundai and EURODRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, EURODRY 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 EURODRY will offset losses from the drop in EURODRY's long position.| Hyundai vs. SAFETY MEDICAL PROD | Hyundai vs. Japan Medical Dynamic | Hyundai vs. Diamyd Medical AB | Hyundai vs. CompuGroup Medical SE |
| EURODRY vs. Cal Maine Foods | EURODRY vs. United Natural Foods | EURODRY vs. SPORTING | EURODRY vs. Tyson Foods |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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