Correlation Between Hyundai and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both Hyundai and Gilead Sciences 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 Gilead Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Gilead Sciences, you can compare the effects of market volatilities on Hyundai and Gilead Sciences 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 Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Gilead Sciences.
Diversification Opportunities for Hyundai and Gilead Sciences
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Gilead is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences 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 Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Hyundai i.e., Hyundai and Gilead Sciences go up and down completely randomly.
Pair Corralation between Hyundai and Gilead Sciences
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Gilead Sciences. In addition to that, Hyundai is 1.32 times more volatile than Gilead Sciences. It trades about -0.11 of its total potential returns per unit of risk. Gilead Sciences is currently generating about 0.01 per unit of volatility. If you would invest 8,886 in Gilead Sciences on August 27, 2024 and sell it today you would earn a total of 17.00 from holding Gilead Sciences or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Gilead Sciences
Performance |
| Timeline |
| Hyundai Motor |
| Gilead Sciences |
Hyundai and Gilead Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Gilead Sciences
The main advantage of trading using opposite Hyundai and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group PLC |
| Gilead Sciences vs. Samsung Electronics Co | Gilead Sciences vs. Samsung Electronics Co | Gilead Sciences vs. Hyundai Motor | Gilead Sciences 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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