Correlation Between Empire State and Hyundai

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

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

Diversification Opportunities for Empire State and Hyundai

0.03

Correlation Coefficient

Empire State  Hyundai

Significant diversification

The 3 months correlation between Empire and Hyundai is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Hyundai go up and down completely randomly.

Pair Corralation between Empire State and Hyundai

Given the investment horizon of 90 days Empire State Realty is expected to generate 0.78 times more return on investment than Hyundai. However, Empire State Realty is 1.28 times less risky than Hyundai. It trades about 0.04 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.12 per unit of risk. If you would invest  1,075  in Empire State Realty on August 30, 2024 and sell it today you would earn a total of  33.00  from holding Empire State Realty or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Empire State Realty  vs.  Hyundai Motor Co

Empire State Realty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Empire State Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empire State is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor 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.

Pair Trading with Empire State and Hyundai

The main advantage of trading using opposite Empire State and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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 Empire State Realty and Hyundai Motor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.