Correlation Between Hyundai and Leef Brands

Can any of the company-specific risk be diversified away by investing in both Hyundai and Leef Brands 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 Leef Brands 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 Leef Brands, you can compare the effects of market volatilities on Hyundai and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Leef Brands.

Diversification Opportunities for Hyundai and Leef Brands

-0.47

Correlation Coefficient

Hyundai  Leef Brands

Very good diversification

The 3 months correlation between Hyundai and Leef is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Hyundai i.e., Hyundai and Leef Brands go up and down completely randomly.

Pair Corralation between Hyundai and Leef Brands

Assuming the 90 days horizon Hyundai is expected to generate 98.31 times less return on investment than Leef Brands. But when comparing it to its historical volatility, Hyundai Motor Co is 3.64 times less risky than Leef Brands. It trades about 0.0 of its potential returns per unit of risk. Leef Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Leef Brands on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Leef Brands or generate 20.0% return on investment over 90 days.

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

Hyundai Motor Co  vs.  Leef Brands

Hyundai Motor

Risk-Adjusted Performance

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

Leef Brands

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leef Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Leef Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Leef Brands

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

The idea behind Hyundai Motor Co and Leef Brands 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.