Correlation Between Hyundai and COSCO SHIPPING

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

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

Diversification Opportunities for Hyundai and COSCO SHIPPING

-0.71

Correlation Coefficient

Hyundai  COSCO SHIPPING

Pay attention - limited upside

The 3 months correlation between Hyundai and COSCO is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and COSCO SHIPPING Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Devel and Hyundai 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 Motor Co are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Devel has no effect on the direction of Hyundai i.e., Hyundai and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Hyundai and COSCO SHIPPING

Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the COSCO SHIPPING. In addition to that, Hyundai is 6.43 times more volatile than COSCO SHIPPING Development. It trades about -0.14 of its total potential returns per unit of risk. COSCO SHIPPING Development is currently generating about 0.12 per unit of volatility. If you would invest  505.00  in COSCO SHIPPING Development on September 15, 2024 and sell it today you would earn a total of  14.00  from holding COSCO SHIPPING Development or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Hyundai Motor Co  vs.  COSCO SHIPPING Development

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor Co 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COSCO SHIPPING Devel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hyundai and COSCO SHIPPING

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

The idea behind Hyundai Motor Co and COSCO SHIPPING Development 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.