Correlation Between Hyundai and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Hyundai and Balfour Beatty 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 Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Balfour Beatty plc, you can compare the effects of market volatilities on Hyundai and Balfour Beatty 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 Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Balfour Beatty.
Diversification Opportunities for Hyundai and Balfour Beatty
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Balfour is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty plc 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 Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of Hyundai i.e., Hyundai and Balfour Beatty go up and down completely randomly.
Pair Corralation between Hyundai and Balfour Beatty
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.61 times more return on investment than Balfour Beatty. However, Hyundai is 1.61 times more volatile than Balfour Beatty plc. It trades about 0.07 of its potential returns per unit of risk. Balfour Beatty plc is currently generating about 0.05 per unit of risk. If you would invest 2,661 in Hyundai Motor on September 26, 2024 and sell it today you would earn a total of 2,619 from holding Hyundai Motor or generate 98.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.2% |
Values | Daily Returns |
Hyundai Motor vs. Balfour Beatty plc
Performance |
Timeline |
Hyundai Motor |
Balfour Beatty plc |
Hyundai and Balfour Beatty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Balfour Beatty
The main advantage of trading using opposite Hyundai and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.Hyundai vs. Oakley Capital Investments | Hyundai vs. Cairn Homes PLC | Hyundai vs. alstria office REIT AG | Hyundai vs. Schroders Investment Trusts |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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