Correlation Between Vulcan Materials and Hyundai
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials 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 Vulcan Materials and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Hyundai Motor, you can compare the effects of market volatilities on Vulcan Materials 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 Vulcan Materials with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Hyundai.
Diversification Opportunities for Vulcan Materials and Hyundai
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vulcan and Hyundai is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Hyundai go up and down completely randomly.
Pair Corralation between Vulcan Materials and Hyundai
Assuming the 90 days horizon Vulcan Materials is expected to generate 1.17 times less return on investment than Hyundai. But when comparing it to its historical volatility, Vulcan Materials is 1.5 times less risky than Hyundai. It trades about 0.08 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,447 in Hyundai Motor on September 14, 2024 and sell it today you would earn a total of 1,383 from holding Hyundai Motor or generate 40.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Hyundai Motor
Performance |
| Timeline |
| Vulcan Materials |
| Hyundai Motor |
Vulcan Materials and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Hyundai
The main advantage of trading using opposite Vulcan Materials and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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.| Vulcan Materials vs. NXP Semiconductors NV | Vulcan Materials vs. TOREX SEMICONDUCTOR LTD | Vulcan Materials vs. AWILCO DRILLING PLC | Vulcan Materials vs. Solstad Offshore ASA |
| Hyundai vs. GOODYEAR T RUBBER | Hyundai vs. Fair Isaac Corp | Hyundai vs. Martin Marietta Materials | Hyundai vs. Vulcan Materials |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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