Correlation Between Hyundai and Expedia

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

By analyzing existing cross correlation between Hyundai Motor and Expedia Group, you can compare the effects of market volatilities on Hyundai and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Expedia.

Diversification Opportunities for Hyundai and Expedia

-0.73

Correlation Coefficient

Hyundai  Expedia

Pay attention - limited upside

The 3 months correlation between Hyundai and Expedia is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia 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 are associated (or correlated) with Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Hyundai i.e., Hyundai and Expedia go up and down completely randomly.

Pair Corralation between Hyundai and Expedia

Assuming the 90 days horizon Hyundai is expected to generate 8.38 times less return on investment than Expedia. In addition to that, Hyundai is 1.08 times more volatile than Expedia Group. It trades about 0.02 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.19 per unit of volatility. If you would invest  10,362  in Expedia Group on September 2, 2024 and sell it today you would earn a total of  7,292  from holding Expedia Group or generate 70.37% return on investment over 90 days.

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

Hyundai Motor  vs.  Expedia Group

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. Despite latest uncertain 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.

Expedia Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expedia Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Expedia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Expedia

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

The idea behind Hyundai Motor and Expedia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.