Correlation Between BOSTON BEER and Hyundai

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

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

Diversification Opportunities for BOSTON BEER and Hyundai

-0.74

Correlation Coefficient

BOSTON BEER  Hyundai

Pay attention - limited upside

The 3 months correlation between BOSTON and Hyundai is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and BOSTON BEER 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 BOSTON BEER A 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 BOSTON BEER i.e., BOSTON BEER and Hyundai go up and down completely randomly.

Pair Corralation between BOSTON BEER and Hyundai

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.33 times less risky than Hyundai. The stock trades about -0.02 of its potential returns per unit of risk. The Hyundai Motor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,419  in Hyundai Motor on October 9, 2024 and sell it today you would earn a total of  1,431  from holding Hyundai Motor or generate 41.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.19%
Values	Daily Returns

BOSTON BEER A   vs.  Hyundai Motor

BOSTON BEER A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. Despite nearly stable basic indicators, Hyundai is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BOSTON BEER and Hyundai

The main advantage of trading using opposite BOSTON BEER and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER 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 BOSTON BEER A 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.