Correlation Between Hyundai and Alton Sports

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

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

Diversification Opportunities for Hyundai and Alton Sports

0.68

Correlation Coefficient

Hyundai  Alton Sports

Poor diversification

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

Pair Corralation between Hyundai and Alton Sports

Assuming the 90 days trading horizon Hyundai Motor is expected to generate 2.18 times more return on investment than Alton Sports. However, Hyundai is 2.18 times more volatile than Alton Sports CoLtd. It trades about -0.08 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.19 per unit of risk. If you would invest  22,772,800  in Hyundai Motor on September 8, 2024 and sell it today you would lose (2,422,800) from holding Hyundai Motor or give up 10.64% 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.  Alton Sports CoLtd

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.

Alton Sports CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alton Sports CoLtd 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.

Pair Trading with Hyundai and Alton Sports

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

The idea behind Hyundai Motor and Alton Sports CoLtd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.