Correlation Between INFORMATION SVC and Hyundai

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

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

Diversification Opportunities for INFORMATION SVC and Hyundai

-0.65

Correlation Coefficient

INFORMATION SVC  Hyundai

Excellent diversification

The 3 months correlation between INFORMATION and Hyundai is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Hyundai go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Hyundai

Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the Hyundai. But the stock apears to be less risky and, when comparing its historical volatility, INFORMATION SVC GRP is 1.09 times less risky than Hyundai. The stock trades about -0.03 of its potential returns per unit of risk. The Hyundai Motor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,407  in Hyundai Motor on October 9, 2024 and sell it today you would earn a total of  1,433  from holding Hyundai Motor or generate 42.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

INFORMATION SVC GRP  vs.  Hyundai Motor

INFORMATION SVC GRP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with INFORMATION SVC and Hyundai

The main advantage of trading using opposite INFORMATION SVC and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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 INFORMATION SVC GRP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.