Correlation Between Kingsway Financial and Hyundai

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

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

Diversification Opportunities for Kingsway Financial and Hyundai

-0.55

Correlation Coefficient

Kingsway Financial  Hyundai

Excellent diversification

The 3 months correlation between Kingsway and Hyundai is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kingsway Financial Services 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 Kingsway Financial 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 Kingsway Financial Services 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 Kingsway Financial i.e., Kingsway Financial and Hyundai go up and down completely randomly.

Pair Corralation between Kingsway Financial and Hyundai

Considering the 90-day investment horizon Kingsway Financial Services is expected to under-perform the Hyundai. In addition to that, Kingsway Financial is 7.26 times more volatile than Hyundai Capital America. It trades about -0.19 of its total potential returns per unit of risk. Hyundai Capital America is currently generating about -0.02 per unit of volatility. If you would invest  10,037  in Hyundai Capital America on October 24, 2024 and sell it today you would lose (3.00) from holding Hyundai Capital America or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.37%
Values	Daily Returns

Kingsway Financial Services  vs.  Hyundai Capital America

Kingsway Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 Kingsway Financial and Hyundai

The main advantage of trading using opposite Kingsway Financial and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsway Financial 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 Kingsway Financial Services 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.