Correlation Between Hyundai and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both Hyundai and Seed Innovations 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 Seed Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Seed Innovations, you can compare the effects of market volatilities on Hyundai and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Seed Innovations.
Diversification Opportunities for Hyundai and Seed Innovations
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyundai and Seed is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Hyundai i.e., Hyundai and Seed Innovations go up and down completely randomly.
Pair Corralation between Hyundai and Seed Innovations
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 0.83 times more return on investment than Seed Innovations. However, Hyundai Motor is 1.2 times less risky than Seed Innovations. It trades about 0.0 of its potential returns per unit of risk. Seed Innovations is currently generating about -0.04 per unit of risk. If you would invest 5,629 in Hyundai Motor on September 24, 2024 and sell it today you would lose (349.00) from holding Hyundai Motor or give up 6.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.81% |
| Values | Daily Returns |
Hyundai Motor vs. Seed Innovations
Performance |
| Timeline |
| Hyundai Motor |
| Seed Innovations |
Hyundai and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Seed Innovations
The main advantage of trading using opposite Hyundai and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| Hyundai vs. The Mercantile Investment | Hyundai vs. Hansa Investment | Hyundai vs. Advanced Medical Solutions | Hyundai vs. Scandinavian Tobacco Group |
| Seed Innovations vs. Samsung Electronics Co | Seed Innovations vs. Samsung Electronics Co | Seed Innovations vs. Hyundai Motor | Seed Innovations 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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