Correlation Between Hyundai and Seven I

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

By analyzing existing cross correlation between Hyundai Motor and Seven i Holdings, you can compare the effects of market volatilities on Hyundai and Seven I 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 Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Seven I.

Diversification Opportunities for Hyundai and Seven I

-0.46

Correlation Coefficient

Hyundai  Seven I

Very good diversification

The 3 months correlation between Hyundai and Seven is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 are associated (or correlated) with Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Hyundai i.e., Hyundai and Seven I go up and down completely randomly.

Pair Corralation between Hyundai and Seven I

Assuming the 90 days horizon Hyundai Motor is expected to under-perform the Seven I. In addition to that, Hyundai is 1.12 times more volatile than Seven i Holdings. It trades about -0.07 of its total potential returns per unit of risk. Seven i Holdings is currently generating about 0.1 per unit of volatility. If you would invest  1,385  in Seven i Holdings on September 13, 2024 and sell it today you would earn a total of  184.00  from holding Seven i Holdings or generate 13.29% return on investment over 90 days.

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

Hyundai Motor  vs.  Seven i Holdings

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. Despite latest unsteady 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.

Seven i Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Seven I reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Seven I

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

The idea behind Hyundai Motor and Seven i Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.