Correlation Between Hyundai and E Investment

Can any of the company-specific risk be diversified away by investing in both Hyundai and E Investment 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 E Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hyundai Motor and E Investment Development, you can compare the effects of market volatilities on Hyundai and E Investment 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 E Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and E Investment.

Diversification Opportunities for Hyundai and E Investment

0.0

Correlation Coefficient

Hyundai  E Investment

Pay attention - limited upside

The 3 months correlation between Hyundai and 093230 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and E Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Investment Development 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 E Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Investment Development has no effect on the direction of Hyundai i.e., Hyundai and E Investment go up and down completely randomly.

Pair Corralation between Hyundai and E Investment

If you would invest  21,113,400  in Hyundai Motor on December 26, 2024 and sell it today you would earn a total of  886,600  from holding Hyundai Motor or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hyundai Motor  vs.  E Investment Development

Hyundai Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Motor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hyundai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

E Investment Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days E Investment Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, E Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hyundai and E Investment

The main advantage of trading using opposite Hyundai and E Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, E Investment 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 E Investment will offset losses from the drop in E Investment's long position.

The idea behind Hyundai Motor and E Investment Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Channel module to use Commodity Channel Index to analyze current equity momentum.