Correlation Between Hyundai Mobis and NH Investment

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

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

Diversification Opportunities for Hyundai Mobis and NH Investment

-0.35

Correlation Coefficient

Hyundai Mobis  NH Investment

Very good diversification

The 3 months correlation between Hyundai and 005940 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Mobis and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Hyundai Mobis 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 Hyundai Mobis are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Hyundai Mobis i.e., Hyundai Mobis and NH Investment go up and down completely randomly.

Pair Corralation between Hyundai Mobis and NH Investment

Assuming the 90 days trading horizon Hyundai Mobis is expected to under-perform the NH Investment. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Mobis is 1.05 times less risky than NH Investment. The stock trades about -0.03 of its potential returns per unit of risk. The NH Investment Securities is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,338,000  in NH Investment Securities on September 25, 2024 and sell it today you would earn a total of  87,000  from holding NH Investment Securities or generate 6.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hyundai Mobis  vs.  NH Investment Securities

Hyundai Mobis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Mobis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Mobis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NH Investment Securities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NH Investment Securities are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NH Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyundai Mobis and NH Investment

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

The idea behind Hyundai Mobis and NH Investment Securities 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.