Correlation Between Virgin Wines and Hyundai
Can any of the company-specific risk be diversified away by investing in both Virgin Wines 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 Virgin Wines and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Wines UK and Hyundai Motor, you can compare the effects of market volatilities on Virgin Wines 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 Virgin Wines with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Hyundai.
Diversification Opportunities for Virgin Wines and Hyundai
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virgin and Hyundai is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Virgin Wines 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 Virgin Wines UK 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 Virgin Wines i.e., Virgin Wines and Hyundai go up and down completely randomly.
Pair Corralation between Virgin Wines and Hyundai
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 2.66 times less risky than Hyundai. The stock trades about -0.3 of its potential returns per unit of risk. The Hyundai Motor is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,500 in Hyundai Motor on September 12, 2024 and sell it today you would lose (120.00) from holding Hyundai Motor or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Hyundai Motor
Performance |
| Timeline |
| Virgin Wines UK |
| Hyundai Motor |
Virgin Wines and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Hyundai
The main advantage of trading using opposite Virgin Wines and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines 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.| Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp | Virgin Wines vs. SoftBank Group Corp | Virgin Wines 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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