Correlation Between Visa and Hyundai
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Hyundai Motor, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hyundai.
Diversification Opportunities for Visa and Hyundai
Pay attention - limited upside
The 3 months correlation between Visa and Hyundai is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Visa 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 Visa Class A 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 Visa i.e., Visa and Hyundai go up and down completely randomly.
Pair Corralation between Visa and Hyundai
Taking into account the 90-day investment horizon Visa is expected to generate 2.0 times less return on investment than Hyundai. But when comparing it to its historical volatility, Visa Class A is 2.16 times less risky than Hyundai. It trades about 0.08 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,573 in Hyundai Motor on August 26, 2024 and sell it today you would earn a total of 2,707 from holding Hyundai Motor or generate 105.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Visa Class A vs. Hyundai Motor
Performance |
| Timeline |
| Visa Class A |
| Hyundai Motor |
Visa and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hyundai
The main advantage of trading using opposite Visa and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Hyundai vs. Tesla Inc | Hyundai vs. BYD Company Limited | Hyundai vs. Superior Plus Corp | Hyundai vs. NMI Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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