Correlation Between Top Material and Hyundai
Can any of the company-specific risk be diversified away by investing in both Top Material 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 Top Material and Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Hyundai Motor Co, you can compare the effects of market volatilities on Top Material 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 Top Material with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Hyundai.
Diversification Opportunities for Top Material and Hyundai
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Top and Hyundai is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Top Material 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 Top Material 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 Top Material i.e., Top Material and Hyundai go up and down completely randomly.
Pair Corralation between Top Material and Hyundai
Assuming the 90 days trading horizon Top Material Co is expected to generate 3.36 times more return on investment than Hyundai. However, Top Material is 3.36 times more volatile than Hyundai Motor Co. It trades about 0.04 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.03 per unit of risk. If you would invest 2,615,000 in Top Material Co on December 30, 2024 and sell it today you would earn a total of 90,000 from holding Top Material Co or generate 3.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Top Material Co vs. Hyundai Motor Co
Performance |
Timeline |
Top Material |
Hyundai Motor |
Top Material and Hyundai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Top Material and Hyundai
The main advantage of trading using opposite Top Material and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material 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.Top Material vs. Insung Information Co | Top Material vs. Kolon Plastics | Top Material vs. Hana Materials | Top Material vs. Moadata Co |
Hyundai vs. Hyunwoo Industrial Co | Hyundai vs. Kg Chemical | Hyundai vs. JC Chemical Co | Hyundai vs. Hyundai Industrial Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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