Correlation Between Hyundai and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Hyundai and Axfood AB 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 Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Axfood AB, you can compare the effects of market volatilities on Hyundai and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Axfood AB.
Diversification Opportunities for Hyundai and Axfood AB
Almost no diversification
The 3 months correlation between Hyundai and Axfood is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Hyundai i.e., Hyundai and Axfood AB go up and down completely randomly.
Pair Corralation between Hyundai and Axfood AB
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Axfood AB. In addition to that, Hyundai is 2.81 times more volatile than Axfood AB. It trades about -0.09 of its total potential returns per unit of risk. Axfood AB is currently generating about -0.16 per unit of volatility. If you would invest 24,180 in Axfood AB on September 12, 2024 and sell it today you would lose (635.00) from holding Axfood AB or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Axfood AB
Performance |
| Timeline |
| Hyundai Motor |
| Axfood AB |
Hyundai and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Axfood AB
The main advantage of trading using opposite Hyundai and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Hyundai vs. Fonix Mobile plc | Hyundai vs. Worldwide Healthcare Trust | Hyundai vs. Omega Healthcare Investors | Hyundai vs. PureTech Health plc |
| Axfood AB vs. Hong Kong Land | Axfood AB vs. Neometals | Axfood AB vs. Coor Service Management | Axfood AB vs. Fidelity Sustainable USD |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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