Correlation Between Hyundai and Kroger
Can any of the company-specific risk be diversified away by investing in both Hyundai and Kroger 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 Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and The Kroger Co, you can compare the effects of market volatilities on Hyundai and Kroger 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 Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Kroger.
Diversification Opportunities for Hyundai and Kroger
Very good diversification
The 3 months correlation between Hyundai and Kroger is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger 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 Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Kroger has no effect on the direction of Hyundai i.e., Hyundai and Kroger go up and down completely randomly.
Pair Corralation between Hyundai and Kroger
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Kroger. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 2.2 times less risky than Kroger. The stock trades about -0.14 of its potential returns per unit of risk. The The Kroger Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,719 in The Kroger Co on December 3, 2024 and sell it today you would earn a total of 484.00 from holding The Kroger Co or generate 8.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hyundai Motor vs. The Kroger Co
Performance |
Timeline |
Hyundai Motor |
The Kroger |
Hyundai and Kroger Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Kroger
The main advantage of trading using opposite Hyundai and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.Hyundai vs. United Overseas Insurance | Hyundai vs. VITEC SOFTWARE GROUP | Hyundai vs. Check Point Software | Hyundai vs. Kingdee International Software |
Kroger vs. CEOTRONICS | Kroger vs. Sunny Optical Technology | Kroger vs. Coor Service Management | Kroger vs. Allegheny Technologies Incorporated |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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