Correlation Between Hyundai and National Beverage
Can any of the company-specific risk be diversified away by investing in both Hyundai and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and National Beverage Corp, you can compare the effects of market volatilities on Hyundai and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and National Beverage.
Diversification Opportunities for Hyundai and National Beverage
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and National is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Hyundai i.e., Hyundai and National Beverage go up and down completely randomly.
Pair Corralation between Hyundai and National Beverage
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.6 times more return on investment than National Beverage. However, Hyundai Motor is 1.68 times less risky than National Beverage. It trades about 0.08 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 per unit of risk. If you would invest 3,494 in Hyundai Motor on August 29, 2024 and sell it today you would earn a total of 2,206 from holding Hyundai Motor or generate 63.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Hyundai Motor vs. National Beverage Corp
Performance |
| Timeline |
| Hyundai Motor |
| National Beverage Corp |
Hyundai and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and National Beverage
The main advantage of trading using opposite Hyundai and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Hyundai vs. Ondine Biomedical | Hyundai vs. Europa Metals | Hyundai vs. Lendinvest PLC | Hyundai vs. Neometals |
| National Beverage vs. Lendinvest PLC | National Beverage vs. Neometals | National Beverage vs. Albion Technology General | National Beverage vs. Jupiter Fund Management |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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