Correlation Between Hyundai and Alien Metals

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

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

Diversification Opportunities for Hyundai and Alien Metals

0.67

Correlation Coefficient

Hyundai  Alien Metals

Poor diversification

The 3 months correlation between Hyundai and Alien is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals 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 Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Hyundai i.e., Hyundai and Alien Metals go up and down completely randomly.

Pair Corralation between Hyundai and Alien Metals

Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.0 times more return on investment than Alien Metals. However, Hyundai Motor is 1.0 times less risky than Alien Metals. It trades about 0.11 of its potential returns per unit of risk. Alien Metals is currently generating about -0.14 per unit of risk. If you would invest  5,180  in Hyundai Motor on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Hyundai Motor or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.0%
Values	Daily Returns

Hyundai Motor  vs.  Alien Metals

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alien Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alien Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hyundai and Alien Metals

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

The idea behind Hyundai Motor and Alien Metals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.