Correlation Between Solution Advanced and Hyundai Mobis

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

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

Diversification Opportunities for Solution Advanced and Hyundai Mobis

-0.77

Correlation Coefficient

Solution Advanced  Hyundai Mobis

Pay attention - limited upside

The 3 months correlation between Solution and Hyundai is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Hyundai Mobis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Mobis and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Hyundai Mobis go up and down completely randomly.

Pair Corralation between Solution Advanced and Hyundai Mobis

Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Hyundai Mobis. In addition to that, Solution Advanced is 1.41 times more volatile than Hyundai Mobis. It trades about -0.13 of its total potential returns per unit of risk. Hyundai Mobis is currently generating about 0.08 per unit of volatility. If you would invest  22,350,000  in Hyundai Mobis on September 22, 2024 and sell it today you would earn a total of  2,050,000  from holding Hyundai Mobis or generate 9.17% return on investment over 90 days.

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

Solution Advanced Technology  vs.  Hyundai Mobis

Solution Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solution Advanced Technology 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Solution Advanced and Hyundai Mobis

The main advantage of trading using opposite Solution Advanced and Hyundai Mobis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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 Solution Advanced Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.