Correlation Between Hyundai and Tesla
Can any of the company-specific risk be diversified away by investing in both Hyundai and Tesla 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 Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Tesla Inc, you can compare the effects of market volatilities on Hyundai and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Tesla.
Diversification Opportunities for Hyundai and Tesla
Pay attention - limited upside
The 3 months correlation between Hyundai and Tesla is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Hyundai i.e., Hyundai and Tesla go up and down completely randomly.
Pair Corralation between Hyundai and Tesla
Assuming the 90 days horizon Hyundai Motor is expected to generate 0.68 times more return on investment than Tesla. However, Hyundai Motor is 1.47 times less risky than Tesla. It trades about 0.07 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.05 per unit of risk. If you would invest 3,295 in Hyundai Motor on August 26, 2024 and sell it today you would earn a total of 1,985 from holding Hyundai Motor or generate 60.24% 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. Tesla Inc
Performance |
| Timeline |
| Hyundai Motor |
| Tesla Inc |
Hyundai and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Tesla
The main advantage of trading using opposite Hyundai and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Hyundai vs. Tesla Inc | Hyundai vs. BYD Company Limited | Hyundai vs. Superior Plus Corp | Hyundai vs. NMI Holdings |
| Tesla vs. BYD Company Limited | Tesla vs. Superior Plus Corp | Tesla vs. NMI Holdings | Tesla vs. Origin Agritech |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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