Correlation Between Hyundai and Marks

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

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

Diversification Opportunities for Hyundai and Marks

-0.35

Correlation Coefficient

Hyundai  Marks

Very good diversification

The 3 months correlation between Hyundai and Marks is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Hyundai i.e., Hyundai and Marks go up and down completely randomly.

Pair Corralation between Hyundai and Marks

Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Marks. In addition to that, Hyundai is 1.68 times more volatile than Marks and Spencer. It trades about -0.14 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.09 per unit of volatility. If you would invest  36,046  in Marks and Spencer on September 14, 2024 and sell it today you would earn a total of  2,974  from holding Marks and Spencer or generate 8.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Hyundai Motor  vs.  Marks and Spencer

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 uncertain 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.

Marks and Spencer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marks and Spencer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Marks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyundai and Marks

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

The idea behind Hyundai Motor and Marks and Spencer 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.