Correlation Between Hyundai and Addtech
Can any of the company-specific risk be diversified away by investing in both Hyundai and Addtech 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 Addtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Addtech, you can compare the effects of market volatilities on Hyundai and Addtech 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 Addtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Addtech.
Diversification Opportunities for Hyundai and Addtech
Average diversification
The 3 months correlation between Hyundai and Addtech is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Addtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech 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 Addtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech has no effect on the direction of Hyundai i.e., Hyundai and Addtech go up and down completely randomly.
Pair Corralation between Hyundai and Addtech
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.01 times more return on investment than Addtech. However, Hyundai is 1.01 times more volatile than Addtech. It trades about 0.06 of its potential returns per unit of risk. Addtech is currently generating about 0.04 per unit of risk. If you would invest 3,713 in Hyundai Motor on September 1, 2024 and sell it today you would earn a total of 1,907 from holding Hyundai Motor or generate 51.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Hyundai Motor vs. Addtech
Performance |
| Timeline |
| Hyundai Motor |
| Addtech |
Hyundai and Addtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Addtech
The main advantage of trading using opposite Hyundai and Addtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Addtech 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 Addtech will offset losses from the drop in Addtech's long position.| Hyundai vs. AfriTin Mining | Hyundai vs. Dentsply Sirona | Hyundai vs. Pets at Home | Hyundai vs. Zanaga Iron Ore |
| Addtech vs. Bellevue Healthcare Trust | Addtech vs. Lendinvest PLC | Addtech vs. Omega Healthcare Investors | Addtech vs. CVS Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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