Correlation Between Hyundai and Sekisui House

Can any of the company-specific risk be diversified away by investing in both Hyundai and Sekisui House 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 Sekisui House 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 Sekisui House, you can compare the effects of market volatilities on Hyundai and Sekisui House 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 Sekisui House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Sekisui House.

Diversification Opportunities for Hyundai and Sekisui House

0.78

Correlation Coefficient

Hyundai  Sekisui House

Poor diversification

The 3 months correlation between Hyundai and Sekisui is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Hyundai i.e., Hyundai and Sekisui House go up and down completely randomly.

Pair Corralation between Hyundai and Sekisui House

Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Sekisui House. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 1.37 times less risky than Sekisui House. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Sekisui House is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,743  in Sekisui House on September 13, 2024 and sell it today you would lose (441.00) from holding Sekisui House or give up 16.08% of portfolio value over 90 days.

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

Hyundai Motor Co  vs.  Sekisui House

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.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Pair Trading with Hyundai and Sekisui House

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

The idea behind Hyundai Motor Co and Sekisui House 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.