Correlation Between Hyundai and Sony Group

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

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

Diversification Opportunities for Hyundai and Sony Group

-0.59

Correlation Coefficient

Hyundai  Sony Group

Excellent diversification

The 3 months correlation between Hyundai and Sony is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group Corp 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Hyundai i.e., Hyundai and Sony Group go up and down completely randomly.

Pair Corralation between Hyundai and Sony Group

Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.14 times more return on investment than Sony Group. However, Hyundai is 1.14 times more volatile than Sony Group Corp. It trades about 0.08 of its potential returns per unit of risk. Sony Group Corp is currently generating about 0.05 per unit of risk. If you would invest  2,430  in Hyundai Motor on September 19, 2024 and sell it today you would earn a total of  2,410  from holding Hyundai Motor or generate 99.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hyundai Motor  vs.  Sony Group Corp

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sony Group Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sony Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Sony Group

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

The idea behind Hyundai Motor and Sony Group Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.