Correlation Between Japan Medical and Hyundai
Can any of the company-specific risk be diversified away by investing in both Japan Medical and Hyundai 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 Japan Medical and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Hyundai Motor, you can compare the effects of market volatilities on Japan Medical and Hyundai 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 Japan Medical with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Hyundai.
Diversification Opportunities for Japan Medical and Hyundai
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Japan and Hyundai is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Japan Medical 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 Japan Medical Dynamic are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Japan Medical i.e., Japan Medical and Hyundai go up and down completely randomly.
Pair Corralation between Japan Medical and Hyundai
Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 1.48 times less risky than Hyundai. The stock trades about -0.12 of its potential returns per unit of risk. The Hyundai Motor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,360 in Hyundai Motor on August 30, 2024 and sell it today you would earn a total of 40.00 from holding Hyundai Motor or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Hyundai Motor
Performance |
| Timeline |
| Japan Medical Dynamic |
| Hyundai Motor |
Japan Medical and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Hyundai
The main advantage of trading using opposite Japan Medical and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Japan Medical vs. Medtronic PLC | Japan Medical vs. Stryker | Japan Medical vs. Boston Scientific | Japan Medical vs. Edwards Lifesciences |
| Hyundai vs. PKSHA TECHNOLOGY INC | Hyundai vs. Singapore Reinsurance | Hyundai vs. Check Point Software | Hyundai vs. Amkor Technology |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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