Correlation Between Hyundai and United Airlines
Can any of the company-specific risk be diversified away by investing in both Hyundai and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and United Airlines Holdings, you can compare the effects of market volatilities on Hyundai and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and United Airlines.
Diversification Opportunities for Hyundai and United Airlines
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and United is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Hyundai i.e., Hyundai and United Airlines go up and down completely randomly.
Pair Corralation between Hyundai and United Airlines
Assuming the 90 days trading horizon Hyundai is expected to generate 1.5 times less return on investment than United Airlines. But when comparing it to its historical volatility, Hyundai Motor is 1.2 times less risky than United Airlines. It trades about 0.07 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,594 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 4,548 from holding United Airlines Holdings or generate 99.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. United Airlines Holdings
Performance |
| Timeline |
| Hyundai Motor |
| United Airlines Holdings |
Hyundai and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and United Airlines
The main advantage of trading using opposite Hyundai and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Hyundai vs. American Public Education | Hyundai vs. Pentair plc | Hyundai vs. FORWARD AIR P | Hyundai vs. WIZZ AIR HLDGUNSPADR4 |
| United Airlines vs. Southwest Airlines Co | United Airlines vs. Superior Plus Corp | United Airlines vs. NMI Holdings | United Airlines vs. Origin Agritech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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