Correlation Between Northern Bear and Hyundai
Can any of the company-specific risk be diversified away by investing in both Northern Bear 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 Northern Bear and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Bear Plc and Hyundai Motor, you can compare the effects of market volatilities on Northern Bear 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 Northern Bear with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Bear and Hyundai.
Diversification Opportunities for Northern Bear and Hyundai
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Hyundai is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Northern Bear Plc and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Northern Bear 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 Northern Bear 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 Northern Bear i.e., Northern Bear and Hyundai go up and down completely randomly.
Pair Corralation between Northern Bear and Hyundai
Assuming the 90 days trading horizon Northern Bear Plc is expected to generate 0.96 times more return on investment than Hyundai. However, Northern Bear Plc is 1.04 times less risky than Hyundai. It trades about 0.15 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.11 per unit of risk. If you would invest 5,200 in Northern Bear Plc on September 21, 2024 and sell it today you would earn a total of 350.00 from holding Northern Bear Plc or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Northern Bear Plc vs. Hyundai Motor
Performance |
| Timeline |
| Northern Bear Plc |
| Hyundai Motor |
Northern Bear and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Bear and Hyundai
The main advantage of trading using opposite Northern Bear and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Bear 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.| Northern Bear vs. Hyundai Motor | Northern Bear vs. Toyota Motor Corp | Northern Bear vs. SoftBank Group Corp | Northern Bear vs. Halyk Bank of |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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