Correlation Between Mazda and Hyundai
Can any of the company-specific risk be diversified away by investing in both Mazda 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 Mazda and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor Corp and Hyundai Motor Co, you can compare the effects of market volatilities on Mazda 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 Mazda with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Hyundai.
Diversification Opportunities for Mazda and Hyundai
Poor diversification
The 3 months correlation between Mazda and Hyundai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor Corp and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Mazda 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 Mazda Motor Corp 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 Mazda i.e., Mazda and Hyundai go up and down completely randomly.
Pair Corralation between Mazda and Hyundai
Assuming the 90 days horizon Mazda Motor Corp is expected to under-perform the Hyundai. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mazda Motor Corp is 1.16 times less risky than Hyundai. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Hyundai Motor Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,739 in Hyundai Motor Co on August 28, 2024 and sell it today you would earn a total of 2,736 from holding Hyundai Motor Co or generate 99.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mazda Motor Corp vs. Hyundai Motor Co
Performance |
| Timeline |
| Mazda Motor Corp |
| Hyundai Motor |
Mazda and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mazda and Hyundai
The main advantage of trading using opposite Mazda and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda 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.| Mazda vs. Isuzu Motors | Mazda vs. Renault SA | Mazda vs. Toyota Motor Corp | Mazda vs. Porsche Automobile Holding |
| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Toyota Motor Corp | Hyundai vs. Porsche Automobile Holding |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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