Correlation Between Hyundai and Daou Tech
Can any of the company-specific risk be diversified away by investing in both Hyundai and Daou Tech 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 Hyundai and Daou Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Daou Tech, you can compare the effects of market volatilities on Hyundai and Daou Tech 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 Hyundai with a short position of Daou Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Daou Tech.
Diversification Opportunities for Hyundai and Daou Tech
Very weak diversification
The 3 months correlation between Hyundai and Daou is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Daou Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Tech and Hyundai 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 Hyundai Motor are associated (or correlated) with Daou Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Tech has no effect on the direction of Hyundai i.e., Hyundai and Daou Tech go up and down completely randomly.
Pair Corralation between Hyundai and Daou Tech
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.07 times more return on investment than Daou Tech. However, Hyundai is 1.07 times more volatile than Daou Tech. It trades about 0.05 of its potential returns per unit of risk. Daou Tech is currently generating about 0.01 per unit of risk. If you would invest 14,767,600 in Hyundai Motor on September 26, 2024 and sell it today you would earn a total of 6,882,400 from holding Hyundai Motor or generate 46.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.79% |
Values | Daily Returns |
Hyundai Motor vs. Daou Tech
Performance |
Timeline |
Hyundai Motor |
Daou Tech |
Hyundai and Daou Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Daou Tech
The main advantage of trading using opposite Hyundai and Daou Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Daou Tech 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 Daou Tech will offset losses from the drop in Daou Tech's long position.Hyundai vs. Woori Technology Investment | Hyundai vs. Samsung Card Co | Hyundai vs. Korea Real Estate | Hyundai vs. CHOROKBAEM PANY Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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