Correlation Between Hyundai and United Internet
Can any of the company-specific risk be diversified away by investing in both Hyundai and United Internet 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 United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and United Internet AG, you can compare the effects of market volatilities on Hyundai and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and United Internet.
Diversification Opportunities for Hyundai and United Internet
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Hyundai i.e., Hyundai and United Internet go up and down completely randomly.
Pair Corralation between Hyundai and United Internet
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.93 times more return on investment than United Internet. However, Hyundai is 1.93 times more volatile than United Internet AG. It trades about 0.06 of its potential returns per unit of risk. United Internet AG is currently generating about 0.09 per unit of risk. If you would invest 5,160 in Hyundai Motor on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Hyundai Motor or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. United Internet AG
Performance |
| Timeline |
| Hyundai Motor |
| United Internet AG |
Hyundai and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and United Internet
The main advantage of trading using opposite Hyundai and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Hyundai vs. Supermarket Income REIT | Hyundai vs. Gaztransport et Technigaz | Hyundai vs. Ion Beam Applications | Hyundai vs. Extra Space Storage |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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