Correlation Between Hyundai and ITM Power
Can any of the company-specific risk be diversified away by investing in both Hyundai and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and ITM Power, you can compare the effects of market volatilities on Hyundai and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and ITM Power.
Diversification Opportunities for Hyundai and ITM Power
Very poor diversification
The 3 months correlation between Hyundai and ITM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and ITM Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power has no effect on the direction of Hyundai i.e., Hyundai and ITM Power go up and down completely randomly.
Pair Corralation between Hyundai and ITM Power
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.67 times more return on investment than ITM Power. However, Hyundai Motor is 1.49 times less risky than ITM Power. It trades about 0.06 of its potential returns per unit of risk. ITM Power is currently generating about -0.03 per unit of risk. If you would invest 3,858 in Hyundai Motor on September 14, 2024 and sell it today you would earn a total of 1,422 from holding Hyundai Motor or generate 36.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. ITM Power
Performance |
| Timeline |
| Hyundai Motor |
| ITM Power |
Hyundai and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and ITM Power
The main advantage of trading using opposite Hyundai and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Hyundai vs. Supermarket Income REIT | Hyundai vs. Gaztransport et Technigaz | Hyundai vs. Ion Beam Applications | Hyundai vs. Extra Space Storage |
| ITM Power vs. Bytes Technology | ITM Power vs. Melia Hotels | ITM Power vs. Sabien Technology Group | ITM Power vs. Wyndham Hotels Resorts |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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