Correlation Between Hyundai and HyVision System

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

Diversification Opportunities for Hyundai and HyVision System

0.24

Correlation Coefficient

Hyundai  HyVision System

Modest diversification

The 3 months correlation between Hyundai and HyVision is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and HyVision System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyVision System 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 HyVision System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyVision System has no effect on the direction of Hyundai i.e., Hyundai and HyVision System go up and down completely randomly.

Pair Corralation between Hyundai and HyVision System

Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.6 times more return on investment than HyVision System. However, Hyundai Motor Co is 1.65 times less risky than HyVision System. It trades about 0.09 of its potential returns per unit of risk. HyVision System is currently generating about -0.01 per unit of risk. If you would invest  15,222,900  in Hyundai Motor Co on December 27, 2024 and sell it today you would earn a total of  1,197,100  from holding Hyundai Motor Co or generate 7.86% return on investment over 90 days.

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

Hyundai Motor Co  vs.  HyVision System

Hyundai Motor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Motor Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HyVision System

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Hyundai Motor Co and HyVision System 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.