Correlation Between Hyundai Home and APS Holdings

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

Diversification Opportunities for Hyundai Home and APS Holdings

0.7

Correlation Coefficient

Hyundai Home  APS Holdings

Poor diversification

The 3 months correlation between Hyundai and APS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Home Shopping and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings 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 APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of Hyundai Home i.e., Hyundai Home and APS Holdings go up and down completely randomly.

Pair Corralation between Hyundai Home and APS Holdings

Assuming the 90 days trading horizon Hyundai Home is expected to generate 1.64 times less return on investment than APS Holdings. But when comparing it to its historical volatility, Hyundai Home Shopping is 1.64 times less risky than APS Holdings. It trades about 0.08 of its potential returns per unit of risk. APS Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  526,000  in APS Holdings on December 29, 2024 and sell it today you would earn a total of  69,000  from holding APS Holdings or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Hyundai Home Shopping  vs.  APS Holdings

Hyundai Home Shopping

Risk-Adjusted Performance

Modest

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.

APS Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APS Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, APS Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai Home and APS Holdings

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

The idea behind Hyundai Home Shopping and APS Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.