Correlation Between Hyundai and Smurfit Kappa

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

Diversification Opportunities for Hyundai and Smurfit Kappa

-0.66

Correlation Coefficient

Hyundai  Smurfit Kappa

Excellent diversification

The 3 months correlation between Hyundai and Smurfit is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group 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 Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Hyundai i.e., Hyundai and Smurfit Kappa go up and down completely randomly.

Pair Corralation between Hyundai and Smurfit Kappa

Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Smurfit Kappa. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.07 times less risky than Smurfit Kappa. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Smurfit Kappa Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,742  in Smurfit Kappa Group on August 30, 2024 and sell it today you would earn a total of  734.00  from holding Smurfit Kappa Group or generate 15.48% return on investment over 90 days.

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

Hyundai Motor Co  vs.  Smurfit Kappa Group

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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Smurfit Kappa Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit Kappa Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Smurfit Kappa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Smurfit Kappa

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

The idea behind Hyundai Motor Co and Smurfit Kappa Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.