Correlation Between Hyundai and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Hyundai and Relx PLC 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 Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Relx PLC ADR, you can compare the effects of market volatilities on Hyundai and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Relx PLC.
Diversification Opportunities for Hyundai and Relx PLC
Very good diversification
The 3 months correlation between Hyundai and Relx is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Hyundai i.e., Hyundai and Relx PLC go up and down completely randomly.
Pair Corralation between Hyundai and Relx PLC
Assuming the 90 days horizon Hyundai Motor is expected to generate 1.03 times more return on investment than Relx PLC. However, Hyundai is 1.03 times more volatile than Relx PLC ADR. It trades about 0.6 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.1 per unit of risk. If you would invest 4,720 in Hyundai Motor on October 15, 2024 and sell it today you would earn a total of 130.00 from holding Hyundai Motor or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.25% |
| Values | Daily Returns |
Hyundai Motor vs. Relx PLC ADR
Performance |
| Timeline |
| Hyundai Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Relx PLC ADR |
Hyundai and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Relx PLC
The main advantage of trading using opposite Hyundai and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| Hyundai vs. Teradata Corp | Hyundai vs. DATATEC LTD 2 | Hyundai vs. Linedata Services SA | Hyundai vs. CVW CLEANTECH INC |
| Relx PLC vs. Iridium Communications | Relx PLC vs. Infrastrutture Wireless Italiane | Relx PLC vs. Zoom Video Communications | Relx PLC vs. Comba Telecom Systems |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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