Correlation Between Hyundai and Leroy Seafood

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

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

Diversification Opportunities for Hyundai and Leroy Seafood

-0.45

Correlation Coefficient

Hyundai  Leroy Seafood

Very good diversification

The 3 months correlation between Hyundai and Leroy is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group 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 Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Hyundai i.e., Hyundai and Leroy Seafood go up and down completely randomly.

Pair Corralation between Hyundai and Leroy Seafood

Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Leroy Seafood. In addition to that, Hyundai is 1.53 times more volatile than Leroy Seafood Group. It trades about -0.14 of its total potential returns per unit of risk. Leroy Seafood Group is currently generating about 0.09 per unit of volatility. If you would invest  4,873  in Leroy Seafood Group on September 14, 2024 and sell it today you would earn a total of  440.00  from holding Leroy Seafood Group or generate 9.03% 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.  Leroy Seafood Group

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 uncertain 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.

Leroy Seafood Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leroy Seafood Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Leroy Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hyundai and Leroy Seafood

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

The idea behind Hyundai Motor and Leroy Seafood Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.