Correlation Between Hyundai and Sporttotal

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

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

Diversification Opportunities for Hyundai and Sporttotal

0.6

Correlation Coefficient

Hyundai  Sporttotal

Poor diversification

The 3 months correlation between Hyundai and Sporttotal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal AG 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 Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of Hyundai i.e., Hyundai and Sporttotal go up and down completely randomly.

Pair Corralation between Hyundai and Sporttotal

Assuming the 90 days horizon Hyundai Motor is expected to generate 0.3 times more return on investment than Sporttotal. However, Hyundai Motor is 3.36 times less risky than Sporttotal. It trades about -0.07 of its potential returns per unit of risk. Sporttotal AG is currently generating about -0.16 per unit of risk. If you would invest  5,909  in Hyundai Motor on September 14, 2024 and sell it today you would lose (729.00) from holding Hyundai Motor or give up 12.34% of portfolio value over 90 days.

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

Hyundai Motor  vs.  Sporttotal AG

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 unsteady 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.

Sporttotal AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sporttotal AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hyundai and Sporttotal

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

The idea behind Hyundai Motor and Sporttotal AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.