Correlation Between Hyundai and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Hyundai and Park 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 Park 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 Park Hotels Resorts, you can compare the effects of market volatilities on Hyundai and Park 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Park Hotels.
Diversification Opportunities for Hyundai and Park Hotels
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyundai and Park is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Hyundai i.e., Hyundai and Park Hotels go up and down completely randomly.
Pair Corralation between Hyundai and Park Hotels
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.83 times more return on investment than Park Hotels. However, Hyundai Motor is 1.21 times less risky than Park Hotels. It trades about 0.06 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest 3,598 in Hyundai Motor on August 31, 2024 and sell it today you would earn a total of 2,022 from holding Hyundai Motor or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.92% |
| Values | Daily Returns |
Hyundai Motor vs. Park Hotels Resorts
Performance |
| Timeline |
| Hyundai Motor |
| Park Hotels Resorts |
Hyundai and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Park Hotels
The main advantage of trading using opposite Hyundai and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Hyundai vs. Empire Metals Limited | Hyundai vs. Vienna Insurance Group | Hyundai vs. Ecclesiastical Insurance Office | Hyundai vs. Adriatic Metals |
| Park Hotels vs. Neometals | Park Hotels vs. Coor Service Management | Park Hotels vs. Aeorema Communications Plc | Park Hotels vs. JLEN Environmental Assets |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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