Correlation Between Hyundai and Northern Bear
Can any of the company-specific risk be diversified away by investing in both Hyundai and Northern Bear 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 Northern Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Northern Bear Plc, you can compare the effects of market volatilities on Hyundai and Northern Bear 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 Northern Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Northern Bear.
Diversification Opportunities for Hyundai and Northern Bear
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyundai and Northern is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Northern Bear Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Bear 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 Northern Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Bear Plc has no effect on the direction of Hyundai i.e., Hyundai and Northern Bear go up and down completely randomly.
Pair Corralation between Hyundai and Northern Bear
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Northern Bear. In addition to that, Hyundai is 1.04 times more volatile than Northern Bear Plc. It trades about -0.11 of its total potential returns per unit of risk. Northern Bear Plc is currently generating about 0.15 per unit of volatility. If you would invest 5,200 in Northern Bear Plc on September 21, 2024 and sell it today you would earn a total of 350.00 from holding Northern Bear Plc or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Motor vs. Northern Bear Plc
Performance |
| Timeline |
| Hyundai Motor |
| Northern Bear Plc |
Hyundai and Northern Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Northern Bear
The main advantage of trading using opposite Hyundai and Northern Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Northern Bear 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 Northern Bear will offset losses from the drop in Northern Bear's long position.| Hyundai vs. Neometals | Hyundai vs. AfriTin Mining | Hyundai vs. Tata Steel Limited | Hyundai vs. Associated British Foods |
| Northern Bear vs. Hyundai Motor | Northern Bear vs. Toyota Motor Corp | Northern Bear vs. SoftBank Group Corp | Northern Bear vs. Halyk Bank of |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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