Correlation Between GUARDANT HEALTH and Hyundai

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

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

Diversification Opportunities for GUARDANT HEALTH and Hyundai

-0.75

Correlation Coefficient

GUARDANT HEALTH  Hyundai

Pay attention - limited upside

The 3 months correlation between GUARDANT and Hyundai is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor and GUARDANT HEALTH 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 GUARDANT HEALTH CL 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 GUARDANT HEALTH i.e., GUARDANT HEALTH and Hyundai go up and down completely randomly.

Pair Corralation between GUARDANT HEALTH and Hyundai

Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 2.18 times more return on investment than Hyundai. However, GUARDANT HEALTH is 2.18 times more volatile than Hyundai Motor. It trades about 0.14 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.14 per unit of risk. If you would invest  2,242  in GUARDANT HEALTH CL on September 22, 2024 and sell it today you would earn a total of  854.00  from holding GUARDANT HEALTH CL or generate 38.09% return on investment over 90 days.

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

GUARDANT HEALTH CL  vs.  Hyundai Motor

GUARDANT HEALTH CL

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARDANT HEALTH CL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GUARDANT HEALTH 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GUARDANT HEALTH and Hyundai

The main advantage of trading using opposite GUARDANT HEALTH and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARDANT HEALTH 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 GUARDANT HEALTH CL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.