Correlation Between Hyundai and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Hyundai and Flow Traders 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 Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Flow Traders NV, you can compare the effects of market volatilities on Hyundai and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Flow Traders.
Diversification Opportunities for Hyundai and Flow Traders
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Flow is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Hyundai i.e., Hyundai and Flow Traders go up and down completely randomly.
Pair Corralation between Hyundai and Flow Traders
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.69 times more return on investment than Flow Traders. However, Hyundai is 1.69 times more volatile than Flow Traders NV. It trades about -0.04 of its potential returns per unit of risk. Flow Traders NV is currently generating about -0.11 per unit of risk. If you would invest 5,500 in Hyundai Motor on September 10, 2024 and sell it today you would lose (100.00) from holding Hyundai Motor or give up 1.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Hyundai Motor vs. Flow Traders NV
Performance |
Timeline |
Hyundai Motor |
Flow Traders NV |
Hyundai and Flow Traders Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Flow Traders
The main advantage of trading using opposite Hyundai and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.Hyundai vs. Martin Marietta Materials | Hyundai vs. Erste Group Bank | Hyundai vs. Synchrony Financial | Hyundai vs. Zurich Insurance Group |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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