Correlation Between Hyundai and Hugel

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

Diversification Opportunities for Hyundai and Hugel

-0.32

Correlation Coefficient

Hyundai  Hugel

Very good diversification

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

Pair Corralation between Hyundai and Hugel

Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.61 times more return on investment than Hugel. However, Hyundai Motor Co is 1.64 times less risky than Hugel. It trades about 0.1 of its potential returns per unit of risk. Hugel Inc is currently generating about 0.06 per unit of risk. If you would invest  6,628,352  in Hyundai Motor Co on September 12, 2024 and sell it today you would earn a total of  9,321,648  from holding Hyundai Motor Co or generate 140.63% return on investment over 90 days.

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

Hyundai Motor Co  vs.  Hugel Inc

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.

Hugel Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hugel Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hugel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyundai and Hugel

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

The idea behind Hyundai Motor Co and Hugel Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.