Correlation Between Hyundai and Pinnacle West
Can any of the company-specific risk be diversified away by investing in both Hyundai and Pinnacle West 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 Pinnacle West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Pinnacle West Capital, you can compare the effects of market volatilities on Hyundai and Pinnacle West 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 Pinnacle West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Pinnacle West.
Diversification Opportunities for Hyundai and Pinnacle West
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Pinnacle is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Pinnacle West Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle West Capital 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 Pinnacle West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle West Capital has no effect on the direction of Hyundai i.e., Hyundai and Pinnacle West go up and down completely randomly.
Pair Corralation between Hyundai and Pinnacle West
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.66 times more return on investment than Pinnacle West. However, Hyundai is 1.66 times more volatile than Pinnacle West Capital. It trades about 0.06 of its potential returns per unit of risk. Pinnacle West Capital is currently generating about 0.06 per unit of risk. If you would invest 3,660 in Hyundai Motor on August 30, 2024 and sell it today you would earn a total of 2,040 from holding Hyundai Motor or generate 55.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.42% |
| Values | Daily Returns |
Hyundai Motor vs. Pinnacle West Capital
Performance |
| Timeline |
| Hyundai Motor |
| Pinnacle West Capital |
Hyundai and Pinnacle West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Pinnacle West
The main advantage of trading using opposite Hyundai and Pinnacle West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Pinnacle West 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 Pinnacle West will offset losses from the drop in Pinnacle West's long position.| Hyundai vs. Ondine Biomedical | Hyundai vs. Europa Metals | Hyundai vs. Lendinvest PLC | Hyundai vs. Neometals |
| Pinnacle West vs. Axfood AB | Pinnacle West vs. Vitec Software Group | Pinnacle West vs. Air Products Chemicals | Pinnacle West vs. Edita Food Industries |
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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