Correlation Between SHIP HEALTHCARE and Hyundai

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

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

Diversification Opportunities for SHIP HEALTHCARE and Hyundai

0.7

Correlation Coefficient

SHIP HEALTHCARE  Hyundai

Poor diversification

The 3 months correlation between SHIP and Hyundai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Hyundai go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and Hyundai

Assuming the 90 days horizon SHIP HEALTHCARE HLDGINC is expected to generate 0.92 times more return on investment than Hyundai. However, SHIP HEALTHCARE HLDGINC is 1.09 times less risky than Hyundai. It trades about 0.01 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.07 per unit of risk. If you would invest  1,330  in SHIP HEALTHCARE HLDGINC on October 1, 2024 and sell it today you would earn a total of  0.00  from holding SHIP HEALTHCARE HLDGINC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

SHIP HEALTHCARE HLDGINC  vs.  Hyundai Motor

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SHIP HEALTHCARE and Hyundai

The main advantage of trading using opposite SHIP HEALTHCARE and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.