Correlation Between Samsung Card and Hyundai

Can any of the company-specific risk be diversified away by investing in both Samsung Card and Hyundai 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 Samsung Card and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Card Co and Hyundai Motor, you can compare the effects of market volatilities on Samsung Card and Hyundai 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 Samsung Card with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Card and Hyundai.

Diversification Opportunities for Samsung Card and Hyundai

0.26

Correlation Coefficient

Samsung Card  Hyundai

Modest diversification

The 3 months correlation between Samsung and Hyundai is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Samsung Card 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 Samsung Card Co are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Samsung Card i.e., Samsung Card and Hyundai go up and down completely randomly.

Pair Corralation between Samsung Card and Hyundai

Assuming the 90 days trading horizon Samsung Card is expected to generate 1.06 times less return on investment than Hyundai. But when comparing it to its historical volatility, Samsung Card Co is 1.35 times less risky than Hyundai. It trades about 0.06 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14,581,800  in Hyundai Motor on September 23, 2024 and sell it today you would earn a total of  6,468,200  from holding Hyundai Motor or generate 44.36% return on investment over 90 days.

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

Samsung Card Co  vs.  Hyundai Motor

Samsung Card

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Card Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Card is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samsung Card and Hyundai

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

The idea behind Samsung Card Co and Hyundai Motor 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.