Correlation Between Hyundai and Waste Management
Can any of the company-specific risk be diversified away by investing in both Hyundai and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Waste Management, you can compare the effects of market volatilities on Hyundai and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Waste Management.
Diversification Opportunities for Hyundai and Waste Management
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Waste is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Hyundai i.e., Hyundai and Waste Management go up and down completely randomly.
Pair Corralation between Hyundai and Waste Management
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.99 times more return on investment than Waste Management. However, Hyundai is 1.99 times more volatile than Waste Management. It trades about 0.09 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 2,488 in Hyundai Motor on August 30, 2024 and sell it today you would earn a total of 3,212 from holding Hyundai Motor or generate 129.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hyundai Motor vs. Waste Management
Performance |
| Timeline |
| Hyundai Motor |
| Waste Management |
Hyundai and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Waste Management
The main advantage of trading using opposite Hyundai and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Hyundai vs. Ondine Biomedical | Hyundai vs. Europa Metals | Hyundai vs. Lendinvest PLC | Hyundai vs. Neometals |
| Waste Management vs. Lendinvest PLC | Waste Management vs. Neometals | Waste Management vs. Albion Technology General | Waste Management 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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