Correlation Between Hyundai and Mutual Federal

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

Diversification Opportunities for Hyundai and Mutual Federal

-0.51

Correlation Coefficient

Hyundai  Mutual Federal

Excellent diversification

The 3 months correlation between Hyundai and Mutual is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Mutual Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Federal Bancorp 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 Mutual Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Federal Bancorp has no effect on the direction of Hyundai i.e., Hyundai and Mutual Federal go up and down completely randomly.

Pair Corralation between Hyundai and Mutual Federal

Assuming the 90 days horizon Hyundai Motor Co is expected to generate 0.75 times more return on investment than Mutual Federal. However, Hyundai Motor Co is 1.34 times less risky than Mutual Federal. It trades about 0.05 of its potential returns per unit of risk. Mutual Federal Bancorp is currently generating about 0.02 per unit of risk. If you would invest  3,280  in Hyundai Motor Co on October 25, 2024 and sell it today you would earn a total of  2,220  from holding Hyundai Motor Co or generate 67.68% 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.  Mutual Federal Bancorp

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 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.

Mutual Federal Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mutual Federal Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Mutual Federal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hyundai and Mutual Federal

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

The idea behind Hyundai Motor Co and Mutual Federal Bancorp 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.