Correlation Between Guaranty Trust and Hyundai

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

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

Diversification Opportunities for Guaranty Trust and Hyundai

-0.58

Correlation Coefficient

Guaranty Trust  Hyundai

Excellent diversification

The 3 months correlation between Guaranty and Hyundai is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and Guaranty Trust 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 Guaranty Trust Holding 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 Guaranty Trust i.e., Guaranty Trust and Hyundai go up and down completely randomly.

Pair Corralation between Guaranty Trust and Hyundai

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to under-perform the Hyundai. In addition to that, Guaranty Trust is 1.2 times more volatile than Hyundai Motor. It trades about -0.02 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.06 per unit of volatility. If you would invest  3,730  in Hyundai Motor on September 27, 2024 and sell it today you would earn a total of  1,550  from holding Hyundai Motor or generate 41.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.52%
Values	Daily Returns

Guaranty Trust Holding  vs.  Hyundai Motor

Guaranty Trust Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guaranty Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 uncertain 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 Guaranty Trust and Hyundai

The main advantage of trading using opposite Guaranty Trust and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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 Guaranty Trust Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..