Correlation Between Renault SA and Hyundai
Can any of the company-specific risk be diversified away by investing in both Renault SA 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 Renault SA and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Hyundai Motor Co, you can compare the effects of market volatilities on Renault SA 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 Renault SA with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Hyundai.
Diversification Opportunities for Renault SA and Hyundai
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Renault and Hyundai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Renault SA 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 Renault SA 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 Renault SA i.e., Renault SA and Hyundai go up and down completely randomly.
Pair Corralation between Renault SA and Hyundai
Assuming the 90 days horizon Renault SA is expected to under-perform the Hyundai. But the pink sheet apears to be less risky and, when comparing its historical volatility, Renault SA is 1.31 times less risky than Hyundai. The pink sheet trades about -0.42 of its potential returns per unit of risk. The Hyundai Motor Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 5,883 in Hyundai Motor Co on August 29, 2024 and sell it today you would lose (208.00) from holding Hyundai Motor Co or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renault SA vs. Hyundai Motor Co
Performance |
| Timeline |
| Renault SA |
| Hyundai Motor |
Renault SA and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renault SA and Hyundai
The main advantage of trading using opposite Renault SA and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA 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.| Renault SA vs. Mazda Motor | Renault SA vs. Subaru Corp ADR | Renault SA vs. Bayerische Motoren Werke | Renault SA vs. Isuzu Motors |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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