Correlation Between Hyundai and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Hyundai and Finnair Oyj 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 Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Finnair Oyj, you can compare the effects of market volatilities on Hyundai and Finnair Oyj 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Finnair Oyj.
Diversification Opportunities for Hyundai and Finnair Oyj
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and Finnair is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj 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 Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Hyundai i.e., Hyundai and Finnair Oyj go up and down completely randomly.
Pair Corralation between Hyundai and Finnair Oyj
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.35 times more return on investment than Finnair Oyj. However, Hyundai is 1.35 times more volatile than Finnair Oyj. It trades about -0.11 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.37 per unit of risk. If you would invest 5,900 in Hyundai Motor on August 27, 2024 and sell it today you would lose (400.00) from holding Hyundai Motor or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Finnair Oyj
Performance |
| Timeline |
| Hyundai Motor |
| Finnair Oyj |
Hyundai and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Finnair Oyj
The main advantage of trading using opposite Hyundai and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Hyundai vs. Mindflair Plc | Hyundai vs. Delta Air Lines | Hyundai vs. MT Bank Corp | Hyundai vs. Norwegian Air Shuttle |
| Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Hyundai Motor | Finnair Oyj vs. Toyota Motor Corp |
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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