Correlation Between Geely Automobile and Hyundai

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

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

Diversification Opportunities for Geely Automobile and Hyundai

-0.66

Correlation Coefficient

Geely Automobile  Hyundai

Excellent diversification

The 3 months correlation between Geely and Hyundai is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Geely Automobile 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 Geely Automobile Holdings 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 Geely Automobile i.e., Geely Automobile and Hyundai go up and down completely randomly.

Pair Corralation between Geely Automobile and Hyundai

Assuming the 90 days horizon Geely Automobile is expected to generate 1.96 times less return on investment than Hyundai. In addition to that, Geely Automobile is 1.12 times more volatile than Hyundai Motor Co. It trades about 0.03 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about 0.06 per unit of volatility. If you would invest  2,938  in Hyundai Motor Co on October 4, 2024 and sell it today you would earn a total of  2,262  from holding Hyundai Motor Co or generate 76.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Geely Automobile Holdings  vs.  Hyundai Motor Co

Geely Automobile Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Geely Automobile reported 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 Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Geely Automobile and Hyundai

The main advantage of trading using opposite Geely Automobile and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile 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 Geely Automobile Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.