Correlation Between Hyundai and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Hyundai and Baker Hughes 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 Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Baker Hughes Co, you can compare the effects of market volatilities on Hyundai and Baker Hughes 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 Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Baker Hughes.
Diversification Opportunities for Hyundai and Baker Hughes
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Baker is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Hyundai i.e., Hyundai and Baker Hughes go up and down completely randomly.
Pair Corralation between Hyundai and Baker Hughes
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.38 times more return on investment than Baker Hughes. However, Hyundai is 1.38 times more volatile than Baker Hughes Co. It trades about -0.09 of its potential returns per unit of risk. Baker Hughes Co is currently generating about -0.31 per unit of risk. If you would invest 5,500 in Hyundai Motor on September 23, 2024 and sell it today you would lose (220.00) from holding Hyundai Motor or give up 4.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 90.91% |
Values | Daily Returns |
Hyundai Motor vs. Baker Hughes Co
Performance |
Timeline |
Hyundai Motor |
Baker Hughes |
Hyundai and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Baker Hughes
The main advantage of trading using opposite Hyundai and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.Hyundai vs. Atresmedia | Hyundai vs. Check Point Software | Hyundai vs. Naked Wines plc | Hyundai vs. One Media iP |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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