Correlation Between Hyundai and BIT Computer

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

Diversification Opportunities for Hyundai and BIT Computer

0.07

Correlation Coefficient

Hyundai  BIT Computer

Significant diversification

The 3 months correlation between Hyundai and BIT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer 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 BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of Hyundai i.e., Hyundai and BIT Computer go up and down completely randomly.

Pair Corralation between Hyundai and BIT Computer

Assuming the 90 days trading horizon Hyundai is expected to generate 1.68 times less return on investment than BIT Computer. But when comparing it to its historical volatility, Hyundai Motor Co is 1.55 times less risky than BIT Computer. It trades about 0.03 of its potential returns per unit of risk. BIT Computer Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  494,636  in BIT Computer Co on November 29, 2024 and sell it today you would earn a total of  12,364  from holding BIT Computer Co or generate 2.5% return on investment over 90 days.

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

Hyundai Motor Co  vs.  BIT Computer Co

Hyundai Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Motor Co are ranked lower than 2 (%) 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.

BIT Computer

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BIT Computer Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BIT Computer 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 BIT Computer

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

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