Correlation Between Hyundai and Puloon Technology

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

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

Diversification Opportunities for Hyundai and Puloon Technology

-0.21

Correlation Coefficient

Hyundai  Puloon Technology

Very good diversification

The 3 months correlation between Hyundai and Puloon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Hyundai i.e., Hyundai and Puloon Technology go up and down completely randomly.

Pair Corralation between Hyundai and Puloon Technology

Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.03 times more return on investment than Puloon Technology. However, Hyundai is 1.03 times more volatile than Puloon Technology. It trades about 0.05 of its potential returns per unit of risk. Puloon Technology is currently generating about 0.02 per unit of risk. If you would invest  21,113,400  in Hyundai Motor on December 25, 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	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Hyundai Motor  vs.  Puloon Technology

Hyundai Motor

Risk-Adjusted Performance

Weak

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.

Puloon Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Puloon Technology 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 Puloon Technology

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

The idea behind Hyundai Motor and Puloon Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.