Correlation Between Hyundai and Silla Sg

Can any of the company-specific risk be diversified away by investing in both Hyundai and Silla Sg 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 Silla Sg 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 Silla Sg Co, you can compare the effects of market volatilities on Hyundai and Silla Sg 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 Silla Sg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Silla Sg.

Diversification Opportunities for Hyundai and Silla Sg

0.32

Correlation Coefficient

Hyundai  Silla Sg

Weak diversification

The 3 months correlation between Hyundai and Silla is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Silla Sg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silla Sg 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 Silla Sg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silla Sg has no effect on the direction of Hyundai i.e., Hyundai and Silla Sg go up and down completely randomly.

Pair Corralation between Hyundai and Silla Sg

Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Silla Sg. In addition to that, Hyundai is 1.34 times more volatile than Silla Sg Co. It trades about -0.05 of its total potential returns per unit of risk. Silla Sg Co is currently generating about -0.02 per unit of volatility. If you would invest  612,000  in Silla Sg Co on September 5, 2024 and sell it today you would lose (12,000) from holding Silla Sg Co or give up 1.96% of portfolio value over 90 days.

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

Hyundai Motor Co  vs.  Silla Sg 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 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.

Silla Sg

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Hyundai Motor Co and Silla Sg 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.