Correlation Between Hyundai and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Hyundai and UPM Kymmene 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 UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and UPM Kymmene Oyj, you can compare the effects of market volatilities on Hyundai and UPM Kymmene 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 UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and UPM Kymmene.
Diversification Opportunities for Hyundai and UPM Kymmene
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and UPM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj 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 UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of Hyundai i.e., Hyundai and UPM Kymmene go up and down completely randomly.
Pair Corralation between Hyundai and UPM Kymmene
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.56 times more return on investment than UPM Kymmene. However, Hyundai is 1.56 times more volatile than UPM Kymmene Oyj. It trades about 0.08 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.03 per unit of risk. If you would invest 2,476 in Hyundai Motor on August 27, 2024 and sell it today you would earn a total of 3,024 from holding Hyundai Motor or generate 122.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Hyundai Motor |
| UPM Kymmene Oyj |
Hyundai and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and UPM Kymmene
The main advantage of trading using opposite Hyundai and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, UPM Kymmene 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 UPM Kymmene will offset losses from the drop in UPM Kymmene's long position.| Hyundai vs. Mindflair Plc | Hyundai vs. Delta Air Lines | Hyundai vs. MT Bank Corp | Hyundai vs. Norwegian Air Shuttle |
| UPM Kymmene vs. Samsung Electronics Co | UPM Kymmene vs. Samsung Electronics Co | UPM Kymmene vs. Hyundai Motor | UPM Kymmene 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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