Correlation Between Hyundai and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both Hyundai and Skandinaviska Enskilda 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 Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on Hyundai and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Skandinaviska Enskilda.
Diversification Opportunities for Hyundai and Skandinaviska Enskilda
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Skandinaviska is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of Hyundai i.e., Hyundai and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between Hyundai and Skandinaviska Enskilda
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.11 times more return on investment than Skandinaviska Enskilda. However, Hyundai is 1.11 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.08 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.04 per unit of risk. If you would invest 2,505 in Hyundai Motor on August 26, 2024 and sell it today you would earn a total of 2,995 from holding Hyundai Motor or generate 119.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.59% |
| Values | Daily Returns |
Hyundai Motor vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| Hyundai Motor |
| Skandinaviska Enskilda |
Hyundai and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Skandinaviska Enskilda
The main advantage of trading using opposite Hyundai and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group PLC |
| Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Hyundai Motor | Skandinaviska Enskilda 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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