Correlation Between InMode and Hyundai

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

By analyzing existing cross correlation between InMode and Hyundai Capital America, you can compare the effects of market volatilities on InMode and Hyundai 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 InMode with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of InMode and Hyundai.

Diversification Opportunities for InMode and Hyundai

0.64

Correlation Coefficient

InMode  Hyundai

Poor diversification

The 3 months correlation between InMode and Hyundai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Hyundai Capital America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Capital America and InMode 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 InMode are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Capital America has no effect on the direction of InMode i.e., InMode and Hyundai go up and down completely randomly.

Pair Corralation between InMode and Hyundai

Given the investment horizon of 90 days InMode is expected to generate 10.88 times more return on investment than Hyundai. However, InMode is 10.88 times more volatile than Hyundai Capital America. It trades about 0.0 of its potential returns per unit of risk. Hyundai Capital America is currently generating about 0.01 per unit of risk. If you would invest  1,790  in InMode on September 18, 2024 and sell it today you would lose (7.00) from holding InMode or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	23.81%
Values	Daily Returns

InMode  vs.  Hyundai Capital America

InMode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hyundai Capital America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Capital America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hyundai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InMode and Hyundai

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

The idea behind InMode and Hyundai Capital America 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.