Correlation Between Hyundai and WonderFi Technologies

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

Diversification Opportunities for Hyundai and WonderFi Technologies

-0.72

Correlation Coefficient

Hyundai  WonderFi Technologies

Pay attention - limited upside

The 3 months correlation between Hyundai and WonderFi is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and WonderFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WonderFi Technologies 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 WonderFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WonderFi Technologies has no effect on the direction of Hyundai i.e., Hyundai and WonderFi Technologies go up and down completely randomly.

Pair Corralation between Hyundai and WonderFi Technologies

Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the WonderFi Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hyundai Motor Co is 3.28 times less risky than WonderFi Technologies. The pink sheet trades about -0.06 of its potential returns per unit of risk. The WonderFi Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10.00  in WonderFi Technologies on August 31, 2024 and sell it today you would earn a total of  8.00  from holding WonderFi Technologies or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Hyundai Motor Co  vs.  WonderFi Technologies

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WonderFi Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WonderFi Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, WonderFi Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and WonderFi Technologies

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

The idea behind Hyundai Motor Co and WonderFi Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.