Correlation Between Hyundai and Seegene

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

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

Diversification Opportunities for Hyundai and Seegene

0.68

Correlation Coefficient

Hyundai  Seegene

Poor diversification

The 3 months correlation between Hyundai and Seegene is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Seegene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seegene 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 Seegene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seegene has no effect on the direction of Hyundai i.e., Hyundai and Seegene go up and down completely randomly.

Pair Corralation between Hyundai and Seegene

Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Seegene. In addition to that, Hyundai is 1.07 times more volatile than Seegene. It trades about -0.07 of its total potential returns per unit of risk. Seegene is currently generating about -0.02 per unit of volatility. If you would invest  2,470,883  in Seegene on September 2, 2024 and sell it today you would lose (95,883) from holding Seegene or give up 3.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hyundai Motor  vs.  Seegene

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Seegene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seegene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seegene 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 Seegene

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

The idea behind Hyundai Motor and Seegene 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.