Correlation Between Hyundai and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Hyundai and Naked Wines 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 Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Naked Wines plc, you can compare the effects of market volatilities on Hyundai and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Naked Wines.
Diversification Opportunities for Hyundai and Naked Wines
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hyundai and Naked is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Hyundai i.e., Hyundai and Naked Wines go up and down completely randomly.
Pair Corralation between Hyundai and Naked Wines
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.39 times more return on investment than Naked Wines. However, Hyundai is 1.39 times more volatile than Naked Wines plc. It trades about -0.13 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.22 per unit of risk. If you would invest 5,900 in Hyundai Motor on August 28, 2024 and sell it today you would lose (440.00) from holding Hyundai Motor or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. Naked Wines plc
Performance |
| Timeline |
| Hyundai Motor |
| Naked Wines plc |
Hyundai and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Naked Wines
The main advantage of trading using opposite Hyundai and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Hyundai vs. Mindflair Plc | Hyundai vs. Delta Air Lines | Hyundai vs. MT Bank Corp | Hyundai vs. Norwegian Air Shuttle |
| Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Hyundai Motor | Naked Wines 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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