Correlation Between Hyundai and Celltrion
Can any of the company-specific risk be diversified away by investing in both Hyundai and Celltrion 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 Celltrion 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 Celltrion, you can compare the effects of market volatilities on Hyundai and Celltrion 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 Celltrion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Celltrion.
Diversification Opportunities for Hyundai and Celltrion
Poor diversification
The 3 months correlation between Hyundai and Celltrion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Celltrion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion 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 Celltrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion has no effect on the direction of Hyundai i.e., Hyundai and Celltrion go up and down completely randomly.
Pair Corralation between Hyundai and Celltrion
Assuming the 90 days trading horizon Hyundai Motor Co is expected to under-perform the Celltrion. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.21 times less risky than Celltrion. The stock trades about -0.07 of its potential returns per unit of risk. The Celltrion is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 17,680,000 in Celltrion on September 26, 2024 and sell it today you would earn a total of 1,760,000 from holding Celltrion or generate 9.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hyundai Motor Co vs. Celltrion
Performance |
Timeline |
Hyundai Motor |
Celltrion |
Hyundai and Celltrion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Celltrion
The main advantage of trading using opposite Hyundai and Celltrion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Celltrion 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 Celltrion will offset losses from the drop in Celltrion's long position.Hyundai vs. Hyundai Motor Co | Hyundai vs. AnterogenCoLtd | Hyundai vs. MEDIPOST Co | Hyundai vs. Gyeongnam Steel Co |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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