Correlation Between Hyundai and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Hyundai and FuelCell Energy 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 FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and FuelCell Energy, you can compare the effects of market volatilities on Hyundai and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and FuelCell Energy.
Diversification Opportunities for Hyundai and FuelCell Energy
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and FuelCell is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Hyundai i.e., Hyundai and FuelCell Energy go up and down completely randomly.
Pair Corralation between Hyundai and FuelCell Energy
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 3.72 times less risky than FuelCell Energy. The stock trades about -0.07 of its potential returns per unit of risk. The FuelCell Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,182 in FuelCell Energy on August 29, 2024 and sell it today you would lose (191.00) from holding FuelCell Energy or give up 16.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. FuelCell Energy
Performance |
| Timeline |
| Hyundai Motor |
| FuelCell Energy |
Hyundai and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and FuelCell Energy
The main advantage of trading using opposite Hyundai and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Hyundai vs. Ondine Biomedical | Hyundai vs. Europa Metals | Hyundai vs. Lendinvest PLC | Hyundai vs. Neometals |
| FuelCell Energy vs. InterContinental Hotels Group | FuelCell Energy vs. Alfa Financial Software | FuelCell Energy vs. PPHE Hotel Group | FuelCell Energy vs. Iron Mountain |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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