Correlation Between Lumia and Hyundai Hcn

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

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

Diversification Opportunities for Lumia and Hyundai Hcn

0.86

Correlation Coefficient

Lumia  Hyundai Hcn

Very poor diversification

The 3 months correlation between Lumia and Hyundai is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Hyundai Hcn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Hcn and Lumia 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 Lumia are associated (or correlated) with Hyundai Hcn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Hcn has no effect on the direction of Lumia i.e., Lumia and Hyundai Hcn go up and down completely randomly.

Pair Corralation between Lumia and Hyundai Hcn

Assuming the 90 days trading horizon Lumia is expected to under-perform the Hyundai Hcn. In addition to that, Lumia is 4.29 times more volatile than Hyundai Hcn. It trades about -0.2 of its total potential returns per unit of risk. Hyundai Hcn is currently generating about -0.27 per unit of volatility. If you would invest  398,739  in Hyundai Hcn on December 24, 2024 and sell it today you would lose (94,739) from holding Hyundai Hcn or give up 23.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.06%
Values	Daily Returns

Lumia  vs.  Hyundai Hcn

Lumia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Lumia shareholders.

Hyundai Hcn

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyundai Hcn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lumia and Hyundai Hcn

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

The idea behind Lumia and Hyundai Hcn 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.