Correlation Between Hyundai and Hanwha InvestmentSecuri

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

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

Diversification Opportunities for Hyundai and Hanwha InvestmentSecuri

-0.61

Correlation Coefficient

Hyundai  Hanwha InvestmentSecuri

Excellent diversification

The 3 months correlation between Hyundai and Hanwha is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri 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 Co are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Hyundai i.e., Hyundai and Hanwha InvestmentSecuri go up and down completely randomly.

Pair Corralation between Hyundai and Hanwha InvestmentSecuri

Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.38 times more return on investment than Hanwha InvestmentSecuri. However, Hyundai Motor Co is 2.66 times less risky than Hanwha InvestmentSecuri. It trades about 0.1 of its potential returns per unit of risk. Hanwha InvestmentSecurities Co is currently generating about 0.02 per unit of risk. If you would invest  7,085,653  in Hyundai Motor Co on October 12, 2024 and sell it today you would earn a total of  8,854,347  from holding Hyundai Motor Co or generate 124.96% return on investment over 90 days.

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

Hyundai Motor Co  vs.  Hanwha InvestmentSecurities Co

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor Co 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.

Hanwha InvestmentSecuri

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha InvestmentSecurities Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanwha InvestmentSecuri sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Hanwha InvestmentSecuri

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

The idea behind Hyundai Motor Co and Hanwha InvestmentSecurities Co 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.