Correlation Between Hyundai and CATLIN GROUP

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

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

Diversification Opportunities for Hyundai and CATLIN GROUP

0.84

Correlation Coefficient

Hyundai  CATLIN GROUP

Very poor diversification

The 3 months correlation between Hyundai and CATLIN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN 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 CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of Hyundai i.e., Hyundai and CATLIN GROUP go up and down completely randomly.

Pair Corralation between Hyundai and CATLIN GROUP

Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the CATLIN GROUP. In addition to that, Hyundai is 2.82 times more volatile than CATLIN GROUP . It trades about -0.12 of its total potential returns per unit of risk. CATLIN GROUP is currently generating about -0.1 per unit of volatility. If you would invest  9,950  in CATLIN GROUP on September 21, 2024 and sell it today you would lose (550.00) from holding CATLIN GROUP or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Hyundai Motor  vs.  CATLIN 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.

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hyundai and CATLIN GROUP

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

The idea behind Hyundai Motor and CATLIN 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.