Correlation Between Hyundai and ONEOK
Can any of the company-specific risk be diversified away by investing in both Hyundai and ONEOK 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 ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and ONEOK Inc, you can compare the effects of market volatilities on Hyundai and ONEOK 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 ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and ONEOK.
Diversification Opportunities for Hyundai and ONEOK
Excellent diversification
The 3 months correlation between Hyundai and ONEOK is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc 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 ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Hyundai i.e., Hyundai and ONEOK go up and down completely randomly.
Pair Corralation between Hyundai and ONEOK
Assuming the 90 days horizon Hyundai Motor is expected to generate 1.53 times more return on investment than ONEOK. However, Hyundai is 1.53 times more volatile than ONEOK Inc. It trades about 0.08 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.1 per unit of risk. If you would invest 2,512 in Hyundai Motor on August 30, 2024 and sell it today you would earn a total of 2,888 from holding Hyundai Motor or generate 114.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. ONEOK Inc
Performance |
| Timeline |
| Hyundai Motor |
| ONEOK Inc |
Hyundai and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and ONEOK
The main advantage of trading using opposite Hyundai and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, ONEOK 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 ONEOK will offset losses from the drop in ONEOK's long position.| Hyundai vs. THAI BEVERAGE | Hyundai vs. MOLSON RS BEVERAGE | Hyundai vs. PREMIER FOODS | Hyundai vs. Astral Foods Limited |
| ONEOK vs. BORR DRILLING NEW | ONEOK vs. Apollo Investment Corp | ONEOK vs. New Residential Investment | ONEOK vs. Meiko Electronics Co |
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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