Correlation Between Hyundai and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Hyundai and Centrica PLC 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 Centrica PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Centrica PLC, you can compare the effects of market volatilities on Hyundai and Centrica PLC 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 Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Centrica PLC.
Diversification Opportunities for Hyundai and Centrica PLC
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Centrica is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Centrica PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica PLC 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 Centrica PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica PLC has no effect on the direction of Hyundai i.e., Hyundai and Centrica PLC go up and down completely randomly.
Pair Corralation between Hyundai and Centrica PLC
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.42 times more return on investment than Centrica PLC. However, Hyundai is 1.42 times more volatile than Centrica PLC. It trades about 0.08 of its potential returns per unit of risk. Centrica PLC is currently generating about 0.05 per unit of risk. If you would invest 2,525 in Hyundai Motor on September 14, 2024 and sell it today you would earn a total of 2,755 from holding Hyundai Motor or generate 109.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hyundai Motor vs. Centrica PLC
Performance |
| Timeline |
| Hyundai Motor |
| Centrica PLC |
Hyundai and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Centrica PLC
The main advantage of trading using opposite Hyundai and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Centrica PLC 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 Centrica PLC will offset losses from the drop in Centrica PLC's long position.| Hyundai vs. Supermarket Income REIT | Hyundai vs. Gaztransport et Technigaz | Hyundai vs. Ion Beam Applications | Hyundai vs. Extra Space Storage |
| Centrica PLC vs. Samsung Electronics Co | Centrica PLC vs. Samsung Electronics Co | Centrica PLC vs. Hyundai Motor | Centrica PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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