Correlation Between Hyundai and American Airlines
Can any of the company-specific risk be diversified away by investing in both Hyundai and American 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 American 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 American Airlines Group, you can compare the effects of market volatilities on Hyundai and American 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and American Airlines.
Diversification Opportunities for Hyundai and American Airlines
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and American is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Hyundai i.e., Hyundai and American Airlines go up and down completely randomly.
Pair Corralation between Hyundai and American Airlines
Assuming the 90 days trading horizon Hyundai is expected to generate 164.33 times less return on investment than American Airlines. But when comparing it to its historical volatility, Hyundai Motor is 1.39 times less risky than American Airlines. It trades about 0.0 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,232 in American Airlines Group on September 1, 2024 and sell it today you would earn a total of 194.00 from holding American Airlines Group or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyundai Motor vs. American Airlines Group
Performance |
| Timeline |
| Hyundai Motor |
| American Airlines |
Hyundai and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and American Airlines
The main advantage of trading using opposite Hyundai and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, American 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 American Airlines will offset losses from the drop in American Airlines' long position.| Hyundai vs. LION ONE METALS | Hyundai vs. ARDAGH METAL PACDL 0001 | Hyundai vs. ULTRA CLEAN HLDGS | Hyundai vs. POWER METALS |
| American Airlines vs. SERI INDUSTRIAL EO | American Airlines vs. GRIFFIN MINING LTD | American Airlines vs. Lion One Metals | American Airlines vs. Western Copper and |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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