Correlation Between Hyundai Home and GS Retail

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

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

Diversification Opportunities for Hyundai Home and GS Retail

-0.53

Correlation Coefficient

Hyundai Home  GS Retail

Excellent diversification

The 3 months correlation between Hyundai and 007070 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Home Shopping and GS Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Retail and Hyundai Home 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 Home Shopping are associated (or correlated) with GS Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Retail has no effect on the direction of Hyundai Home i.e., Hyundai Home and GS Retail go up and down completely randomly.

Pair Corralation between Hyundai Home and GS Retail

Assuming the 90 days trading horizon Hyundai Home Shopping is expected to generate 1.19 times more return on investment than GS Retail. However, Hyundai Home is 1.19 times more volatile than GS Retail Co. It trades about 0.08 of its potential returns per unit of risk. GS Retail Co is currently generating about -0.16 per unit of risk. If you would invest  4,645,000  in Hyundai Home Shopping on December 24, 2024 and sell it today you would earn a total of  365,000  from holding Hyundai Home Shopping or generate 7.86% return on investment over 90 days.

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

Hyundai Home Shopping  vs.  GS Retail Co

Hyundai Home Shopping

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Home Shopping are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Home may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GS Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days GS Retail Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hyundai Home and GS Retail

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

The idea behind Hyundai Home Shopping and GS Retail Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.