Correlation Between Hyundai and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Hyundai and Fair Oaks 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 Fair Oaks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Fair Oaks Income, you can compare the effects of market volatilities on Hyundai and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Fair Oaks.
Diversification Opportunities for Hyundai and Fair Oaks
Excellent diversification
The 3 months correlation between Hyundai and Fair is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Hyundai i.e., Hyundai and Fair Oaks go up and down completely randomly.
Pair Corralation between Hyundai and Fair Oaks
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.78 times more return on investment than Fair Oaks. However, Hyundai is 1.78 times more volatile than Fair Oaks Income. It trades about 0.07 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.07 per unit of risk. If you would invest 2,652 in Hyundai Motor on September 25, 2024 and sell it today you would earn a total of 2,628 from holding Hyundai Motor or generate 99.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Hyundai Motor vs. Fair Oaks Income
Performance |
Timeline |
Hyundai Motor |
Fair Oaks Income |
Hyundai and Fair Oaks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Fair Oaks
The main advantage of trading using opposite Hyundai and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.Hyundai vs. Silvercorp Metals | Hyundai vs. Hochschild Mining plc | Hyundai vs. Wheaton Precious Metals | Hyundai vs. Fulcrum Metals PLC |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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