Correlation Between Hyundai Hcn and Phoenix Materials

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

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

Diversification Opportunities for Hyundai Hcn and Phoenix Materials

-0.43

Correlation Coefficient

Hyundai Hcn  Phoenix Materials

Very good diversification

The 3 months correlation between Hyundai and Phoenix is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Hcn and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and Hyundai Hcn 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 Hcn are associated (or correlated) with Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Hyundai Hcn i.e., Hyundai Hcn and Phoenix Materials go up and down completely randomly.

Pair Corralation between Hyundai Hcn and Phoenix Materials

Assuming the 90 days trading horizon Hyundai Hcn is expected to generate 0.45 times more return on investment than Phoenix Materials. However, Hyundai Hcn is 2.22 times less risky than Phoenix Materials. It trades about 0.03 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.01 per unit of risk. If you would invest  277,500  in Hyundai Hcn on October 24, 2024 and sell it today you would earn a total of  73,500  from holding Hyundai Hcn or generate 26.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.27%
Values	Daily Returns

Hyundai Hcn  vs.  Phoenix Materials Co

Hyundai Hcn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Hcn 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.

Phoenix Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Materials Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Phoenix Materials sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai Hcn and Phoenix Materials

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

The idea behind Hyundai Hcn and Phoenix Materials 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.