Correlation Between United States and Hyundai

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

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

Diversification Opportunities for United States and Hyundai

0.0

Correlation Coefficient

United States  Hyundai

Pay attention - limited upside

The 3 months correlation between United and Hyundai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and United States 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 United States Steel 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 Motor has no effect on the direction of United States i.e., United States and Hyundai go up and down completely randomly.

Pair Corralation between United States and Hyundai

Assuming the 90 days trading horizon United States Steel is expected to under-perform the Hyundai. In addition to that, United States is 1.39 times more volatile than Hyundai Motor. It trades about -0.19 of its total potential returns per unit of risk. Hyundai Motor is currently generating about 0.07 per unit of volatility. If you would invest  4,860  in Hyundai Motor on October 10, 2024 and sell it today you would earn a total of  80.00  from holding Hyundai Motor or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.94%
Values	Daily Returns

United States Steel  vs.  Hyundai Motor

United States Steel

Risk-Adjusted Performance

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Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 comparatively stable basic indicators, Hyundai is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United States and Hyundai

The main advantage of trading using opposite United States and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel and Hyundai Motor 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.