Correlation Between Hyundai and Bristol Myers

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

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

Diversification Opportunities for Hyundai and Bristol Myers

-0.75

Correlation Coefficient

Hyundai  Bristol Myers

Pay attention - limited upside

The 3 months correlation between Hyundai and Bristol is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Hyundai 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 Hyundai Motor Co are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Hyundai i.e., Hyundai and Bristol Myers go up and down completely randomly.

Pair Corralation between Hyundai and Bristol Myers

Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Bristol Myers. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.35 times less risky than Bristol Myers. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  88,895  in Bristol Myers Squibb on October 22, 2024 and sell it today you would earn a total of  4,627  from holding Bristol Myers Squibb or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Hyundai Motor Co  vs.  Bristol Myers Squibb

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 stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bristol Myers Squibb

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Bristol Myers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Bristol Myers

The main advantage of trading using opposite Hyundai and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Bristol Myers 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 Bristol Myers will offset losses from the drop in Bristol Myers' long position.

The idea behind Hyundai Motor Co and Bristol Myers Squibb 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.