Correlation Between MG Plc and Hyundai
Can any of the company-specific risk be diversified away by investing in both MG Plc 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 MG Plc and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MG Plc and Hyundai Motor, you can compare the effects of market volatilities on MG Plc 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 MG Plc with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of MG Plc and Hyundai.
Diversification Opportunities for MG Plc and Hyundai
Very poor diversification
The 3 months correlation between MNG and Hyundai is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MG Plc and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and MG Plc 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 MG Plc 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 MG Plc i.e., MG Plc and Hyundai go up and down completely randomly.
Pair Corralation between MG Plc and Hyundai
Assuming the 90 days trading horizon MG Plc is expected to generate 0.41 times more return on investment than Hyundai. However, MG Plc is 2.45 times less risky than Hyundai. It trades about 0.01 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.1 per unit of risk. If you would invest 20,050 in MG Plc on August 26, 2024 and sell it today you would earn a total of 30.00 from holding MG Plc or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MG Plc vs. Hyundai Motor
Performance |
| Timeline |
| MG Plc |
| Hyundai Motor |
MG Plc and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MG Plc and Hyundai
The main advantage of trading using opposite MG Plc and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MG Plc 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.| MG Plc vs. Fidelity National Information | MG Plc vs. Teradata Corp | MG Plc vs. Ion Beam Applications | MG Plc vs. Automatic Data Processing |
| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group PLC |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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