Correlation Between Hyundai and Weir Group

Can any of the company-specific risk be diversified away by investing in both Hyundai and Weir 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 Weir 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 Weir Group PLC, you can compare the effects of market volatilities on Hyundai and Weir 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Weir Group.

Diversification Opportunities for Hyundai and Weir Group

-0.58

Correlation Coefficient

Hyundai  Weir Group

Excellent diversification

The 3 months correlation between Hyundai and Weir is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of Hyundai i.e., Hyundai and Weir Group go up and down completely randomly.

Pair Corralation between Hyundai and Weir Group

Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.6 times more return on investment than Weir Group. However, Hyundai is 1.6 times more volatile than Weir Group PLC. It trades about 0.08 of its potential returns per unit of risk. Weir Group PLC is currently generating about 0.06 per unit of risk. If you would invest  2,525  in Hyundai Motor on September 14, 2024 and sell it today you would earn a total of  2,755  from holding Hyundai Motor or generate 109.11% 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.  Weir Group PLC

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.

Weir Group PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weir Group PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Weir Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyundai and Weir Group

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

The idea behind Hyundai Motor and Weir Group PLC 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.