Correlation Between Hyundai and SM Energy
Can any of the company-specific risk be diversified away by investing in both Hyundai and SM Energy 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 SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and SM Energy Co, you can compare the effects of market volatilities on Hyundai and SM Energy 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 SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and SM Energy.
Diversification Opportunities for Hyundai and SM Energy
Very good diversification
The 3 months correlation between Hyundai and 0KZA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy 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 SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Hyundai i.e., Hyundai and SM Energy go up and down completely randomly.
Pair Corralation between Hyundai and SM Energy
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.93 times more return on investment than SM Energy. However, Hyundai Motor is 1.08 times less risky than SM Energy. It trades about 0.03 of its potential returns per unit of risk. SM Energy Co is currently generating about -0.02 per unit of risk. If you would invest 5,473 in Hyundai Motor on August 29, 2024 and sell it today you would earn a total of 227.00 from holding Hyundai Motor or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hyundai Motor vs. SM Energy Co
Performance |
| Timeline |
| Hyundai Motor |
| SM Energy |
Hyundai and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and SM Energy
The main advantage of trading using opposite Hyundai and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, SM Energy 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 SM Energy will offset losses from the drop in SM Energy's long position.| Hyundai vs. Ondine Biomedical | Hyundai vs. Europa Metals | Hyundai vs. Lendinvest PLC | Hyundai vs. Neometals |
| SM Energy vs. Naturhouse Health SA | SM Energy vs. Induction Healthcare Group | SM Energy vs. Omega Healthcare Investors | SM Energy vs. Gaming Realms plc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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