Correlation Between Hyundai and Marstons PLC

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

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

Diversification Opportunities for Hyundai and Marstons PLC

0.22

Correlation Coefficient

Hyundai  Marstons PLC

Modest diversification

The 3 months correlation between Hyundai and Marstons is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons 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 Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Hyundai i.e., Hyundai and Marstons PLC go up and down completely randomly.

Pair Corralation between Hyundai and Marstons PLC

Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Marstons PLC. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 1.09 times less risky than Marstons PLC. The stock trades about -0.12 of its potential returns per unit of risk. The Marstons PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,040  in Marstons PLC on September 23, 2024 and sell it today you would earn a total of  510.00  from holding Marstons PLC or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Hyundai Motor  vs.  Marstons PLC

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.

Marstons PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marstons PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyundai and Marstons PLC

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

The idea behind Hyundai Motor and Marstons PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.