Correlation Between Hyundai and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Hyundai and AMG Advanced 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 AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Hyundai and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and AMG Advanced.
Diversification Opportunities for Hyundai and AMG Advanced
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyundai and AMG is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Hyundai i.e., Hyundai and AMG Advanced go up and down completely randomly.
Pair Corralation between Hyundai and AMG Advanced
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.41 times more return on investment than AMG Advanced. However, Hyundai is 1.41 times more volatile than AMG Advanced Metallurgical. It trades about -0.06 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.17 per unit of risk. If you would invest 5,900 in Hyundai Motor on August 29, 2024 and sell it today you would lose (240.00) from holding Hyundai Motor or give up 4.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Hyundai Motor |
| AMG Advanced Metallu |
Hyundai and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and AMG Advanced
The main advantage of trading using opposite Hyundai and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group PLC |
| AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Hyundai Motor | AMG Advanced 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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