Correlation Between Hyundai and Seeing Machines
Can any of the company-specific risk be diversified away by investing in both Hyundai and Seeing Machines 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 Seeing Machines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Seeing Machines Limited, you can compare the effects of market volatilities on Hyundai and Seeing Machines 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 Seeing Machines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Seeing Machines.
Diversification Opportunities for Hyundai and Seeing Machines
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and Seeing is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Seeing Machines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seeing Machines 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 Seeing Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seeing Machines has no effect on the direction of Hyundai i.e., Hyundai and Seeing Machines go up and down completely randomly.
Pair Corralation between Hyundai and Seeing Machines
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Seeing Machines. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 1.49 times less risky than Seeing Machines. The stock trades about -0.07 of its potential returns per unit of risk. The Seeing Machines Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 355.00 in Seeing Machines Limited on September 4, 2024 and sell it today you would lose (15.00) from holding Seeing Machines Limited or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hyundai Motor vs. Seeing Machines Limited
Performance |
| Timeline |
| Hyundai Motor |
| Seeing Machines |
Hyundai and Seeing Machines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Seeing Machines
The main advantage of trading using opposite Hyundai and Seeing Machines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Seeing Machines 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 Seeing Machines will offset losses from the drop in Seeing Machines' long position.| Hyundai vs. Empire Metals Limited | Hyundai vs. The Mercantile Investment | Hyundai vs. Sovereign Metals | Hyundai vs. Cornish Metals |
| Seeing Machines vs. Samsung Electronics Co | Seeing Machines vs. Samsung Electronics Co | Seeing Machines vs. Hyundai Motor | Seeing Machines 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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