Correlation Between KTB Investment and Hyundai

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

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

Diversification Opportunities for KTB Investment and Hyundai

0.59

Correlation Coefficient

KTB Investment  Hyundai

Very weak diversification

The 3 months correlation between KTB and Hyundai is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and KTB Investment 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 KTB Investment Securities 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 KTB Investment i.e., KTB Investment and Hyundai go up and down completely randomly.

Pair Corralation between KTB Investment and Hyundai

Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 1.13 times more return on investment than Hyundai. However, KTB Investment is 1.13 times more volatile than Hyundai Motor. It trades about 0.14 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.09 per unit of risk. If you would invest  303,500  in KTB Investment Securities on September 30, 2024 and sell it today you would earn a total of  63,000  from holding KTB Investment Securities or generate 20.76% return on investment over 90 days.

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

KTB Investment Securities  vs.  Hyundai Motor

KTB Investment Securities

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KTB Investment and Hyundai

The main advantage of trading using opposite KTB Investment and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KTB Investment 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 KTB Investment Securities 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.