Correlation Between Display Tech and Hyundai

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Can any of the company-specific risk be diversified away by investing in both Display Tech 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 Display Tech and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Display Tech Co and Hyundai Motor, you can compare the effects of market volatilities on Display Tech 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 Display Tech with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Display Tech and Hyundai.

Diversification Opportunities for Display Tech and Hyundai

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Display and Hyundai is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Display Tech Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Display Tech 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 Display Tech 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 Display Tech i.e., Display Tech and Hyundai go up and down completely randomly.

Pair Corralation between Display Tech and Hyundai

Assuming the 90 days trading horizon Display Tech Co is expected to under-perform the Hyundai. In addition to that, Display Tech is 1.66 times more volatile than Hyundai Motor. It trades about -0.01 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.04 per unit of volatility. If you would invest  15,779,900  in Hyundai Motor on October 24, 2024 and sell it today you would earn a total of  4,870,100  from holding Hyundai Motor or generate 30.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.21%
ValuesDaily Returns

Display Tech Co  vs.  Hyundai Motor

 Performance 
       Timeline  
Display Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Display Tech Co 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.
Hyundai Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Display Tech and Hyundai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Display Tech and Hyundai

The main advantage of trading using opposite Display Tech and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Display Tech 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 Display Tech 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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