Correlation Between Nasdaq and Hyundai Mobis

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

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

Diversification Opportunities for Nasdaq and Hyundai Mobis

0.15

Correlation Coefficient

Nasdaq  Hyundai Mobis

Average diversification

The 3 months correlation between Nasdaq and Hyundai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Hyundai Mobis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Mobis and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Hyundai Mobis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Mobis has no effect on the direction of Nasdaq i.e., Nasdaq and Hyundai Mobis go up and down completely randomly.

Pair Corralation between Nasdaq and Hyundai Mobis

Given the investment horizon of 90 days Nasdaq is expected to generate 9.88 times less return on investment than Hyundai Mobis. But when comparing it to its historical volatility, Nasdaq Inc is 1.63 times less risky than Hyundai Mobis. It trades about 0.02 of its potential returns per unit of risk. Hyundai Mobis is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  20,850,000  in Hyundai Mobis on December 10, 2024 and sell it today you would earn a total of  5,000,000  from holding Hyundai Mobis or generate 23.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.5%
Values	Daily Returns

Nasdaq Inc  vs.  Hyundai Mobis

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Hyundai Mobis

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Mobis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hyundai Mobis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Hyundai Mobis

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

The idea behind Nasdaq Inc and Hyundai Mobis 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.