Correlation Between Hyundai and Preferred Bank

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

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

Diversification Opportunities for Hyundai and Preferred Bank

0.0

Correlation Coefficient

Hyundai  Preferred Bank

Pay attention - limited upside

The 3 months correlation between Hyundai and Preferred is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of Hyundai i.e., Hyundai and Preferred Bank go up and down completely randomly.

Pair Corralation between Hyundai and Preferred Bank

If you would invest  4,840  in Hyundai Motor on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Hyundai Motor or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hyundai Motor  vs.  Preferred Bank

Hyundai Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hyundai is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Preferred Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Preferred Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Preferred Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hyundai and Preferred Bank

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

The idea behind Hyundai Motor and Preferred Bank 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.