Correlation Between Hyundai and Peoples Insurance

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

Diversification Opportunities for Hyundai and Peoples Insurance

0.0

Correlation Coefficient

Hyundai  Peoples Insurance

Pay attention - limited upside

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

Pair Corralation between Hyundai and Peoples Insurance

If you would invest  39.00  in The Peoples Insurance on December 23, 2024 and sell it today you would earn a total of  11.00  from holding The Peoples Insurance or generate 28.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Hyundai Motor  vs.  The Peoples Insurance

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.

Peoples Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Peoples Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Peoples Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Peoples Insurance

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

The idea behind Hyundai Motor and The Peoples Insurance 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.