Correlation Between Hyundai and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Hyundai and Alfa Financial 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 Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Alfa Financial Software, you can compare the effects of market volatilities on Hyundai and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Alfa Financial.
Diversification Opportunities for Hyundai and Alfa Financial
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Alfa is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Hyundai i.e., Hyundai and Alfa Financial go up and down completely randomly.
Pair Corralation between Hyundai and Alfa Financial
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.27 times more return on investment than Alfa Financial. However, Hyundai is 1.27 times more volatile than Alfa Financial Software. It trades about 0.07 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.07 per unit of risk. If you would invest 3,976 in Hyundai Motor on August 28, 2024 and sell it today you would earn a total of 1,484 from holding Hyundai Motor or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Alfa Financial Software
Performance |
| Timeline |
| Hyundai Motor |
| Alfa Financial Software |
Hyundai and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Alfa Financial
The main advantage of trading using opposite Hyundai and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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