Correlation Between Lion One and Hyundai
Can any of the company-specific risk be diversified away by investing in both Lion One 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 Lion One and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and Hyundai Motor, you can compare the effects of market volatilities on Lion One 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 Lion One with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Hyundai.
Diversification Opportunities for Lion One and Hyundai
Poor diversification
The 3 months correlation between Lion and Hyundai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Hyundai go up and down completely randomly.
Pair Corralation between Lion One and Hyundai
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Hyundai. In addition to that, Lion One is 2.1 times more volatile than Hyundai Motor. It trades about -0.04 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.06 per unit of volatility. If you would invest 2,846 in Hyundai Motor on September 19, 2024 and sell it today you would earn a total of 1,964 from holding Hyundai Motor or generate 69.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Hyundai Motor
Performance |
| Timeline |
| Lion One Metals |
| Hyundai Motor |
Lion One and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Hyundai
The main advantage of trading using opposite Lion One and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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.| Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA | Lion One vs. Reliance Steel Aluminum |
| Hyundai vs. LION ONE METALS | Hyundai vs. Lion One Metals | Hyundai vs. Harmony Gold Mining | Hyundai vs. Zijin Mining Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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