Correlation Between Hyundai and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Hyundai and Host Hotels 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 Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Host Hotels Resorts, you can compare the effects of market volatilities on Hyundai and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Host Hotels.
Diversification Opportunities for Hyundai and Host Hotels
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Host is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Hyundai i.e., Hyundai and Host Hotels go up and down completely randomly.
Pair Corralation between Hyundai and Host Hotels
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Host Hotels. In addition to that, Hyundai is 1.76 times more volatile than Host Hotels Resorts. It trades about -0.16 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.11 per unit of volatility. If you would invest 1,787 in Host Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 105.00 from holding Host Hotels Resorts or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Host Hotels Resorts
Performance |
| Timeline |
| Hyundai Motor |
| Host Hotels Resorts |
Hyundai and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Host Hotels
The main advantage of trading using opposite Hyundai and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Hyundai vs. Panther Metals PLC | Hyundai vs. METALL ZUG AG | Hyundai vs. Power Metal Resources | Hyundai vs. American Homes 4 |
| Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Samsung Electronics Co | Host Hotels vs. Hyundai Motor | Host Hotels vs. Reliance Industries Ltd |
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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