Correlation Between Optima Health and Hyundai
Can any of the company-specific risk be diversified away by investing in both Optima Health 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 Optima Health and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Health plc and Hyundai Motor, you can compare the effects of market volatilities on Optima Health 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 Optima Health with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Hyundai.
Diversification Opportunities for Optima Health and Hyundai
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Optima and Hyundai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Optima Health 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 Optima Health 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 Optima Health i.e., Optima Health and Hyundai go up and down completely randomly.
Pair Corralation between Optima Health and Hyundai
Assuming the 90 days trading horizon Optima Health is expected to generate 2.12 times less return on investment than Hyundai. But when comparing it to its historical volatility, Optima Health plc is 1.67 times less risky than Hyundai. It trades about 0.07 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,480 in Hyundai Motor on August 29, 2024 and sell it today you would earn a total of 3,180 from holding Hyundai Motor or generate 128.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.85% |
| Values | Daily Returns |
Optima Health plc vs. Hyundai Motor
Performance |
| Timeline |
| Optima Health plc |
| Hyundai Motor |
Optima Health and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Health and Hyundai
The main advantage of trading using opposite Optima Health and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health 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.| Optima Health vs. Toyota Motor Corp | Optima Health vs. OTP Bank Nyrt | Optima Health vs. Yum Brands | Optima Health vs. Cognizant Technology Solutions |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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