Correlation Between Hyundai and Coloplast
Can any of the company-specific risk be diversified away by investing in both Hyundai and Coloplast 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 Coloplast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Coloplast AS, you can compare the effects of market volatilities on Hyundai and Coloplast 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 Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Coloplast.
Diversification Opportunities for Hyundai and Coloplast
Good diversification
The 3 months correlation between Hyundai and Coloplast is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast AS 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 Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast AS has no effect on the direction of Hyundai i.e., Hyundai and Coloplast go up and down completely randomly.
Pair Corralation between Hyundai and Coloplast
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.5 times more return on investment than Coloplast. However, Hyundai is 1.5 times more volatile than Coloplast AS. It trades about 0.08 of its potential returns per unit of risk. Coloplast AS is currently generating about 0.02 per unit of risk. If you would invest 2,427 in Hyundai Motor on September 5, 2024 and sell it today you would earn a total of 2,973 from holding Hyundai Motor or generate 122.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hyundai Motor vs. Coloplast AS
Performance |
| Timeline |
| Hyundai Motor |
| Coloplast AS |
Hyundai and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Coloplast
The main advantage of trading using opposite Hyundai and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast's long position.| Hyundai vs. New Residential Investment | Hyundai vs. Bankers Investment Trust | Hyundai vs. Federal Realty Investment | Hyundai vs. MTI Wireless Edge |
| Coloplast vs. Samsung Electronics Co | Coloplast vs. Samsung Electronics Co | Coloplast vs. Hyundai Motor | Coloplast 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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