Correlation Between Hyundai and TDK
Can any of the company-specific risk be diversified away by investing in both Hyundai and TDK 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 TDK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and TDK Corporation, you can compare the effects of market volatilities on Hyundai and TDK 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 TDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and TDK.
Diversification Opportunities for Hyundai and TDK
Excellent diversification
The 3 months correlation between Hyundai and TDK is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation 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 TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of Hyundai i.e., Hyundai and TDK go up and down completely randomly.
Pair Corralation between Hyundai and TDK
Assuming the 90 days horizon Hyundai Motor is expected to under-perform the TDK. In addition to that, Hyundai is 1.09 times more volatile than TDK Corporation. It trades about -0.09 of its total potential returns per unit of risk. TDK Corporation is currently generating about 0.04 per unit of volatility. If you would invest 1,231 in TDK Corporation on September 12, 2024 and sell it today you would earn a total of 16.00 from holding TDK Corporation or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. TDK Corp.
Performance |
| Timeline |
| Hyundai Motor |
| TDK Corporation |
Hyundai and TDK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and TDK
The main advantage of trading using opposite Hyundai and TDK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, TDK 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 TDK will offset losses from the drop in TDK's long position.| Hyundai vs. SCANDMEDICAL SOLDK 040 | Hyundai vs. RETAIL FOOD GROUP | Hyundai vs. Avanos Medical | Hyundai vs. Merit Medical 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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