Correlation Between Pure Storage and Hyundai

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

By analyzing existing cross correlation between Pure Storage and Hyundai Capital America, you can compare the effects of market volatilities on Pure Storage and Hyundai 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 Pure Storage with a short position of Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Hyundai.

Diversification Opportunities for Pure Storage and Hyundai

-0.02

Correlation Coefficient

Pure Storage  Hyundai

Good diversification

The 3 months correlation between Pure and Hyundai is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Hyundai Capital America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Capital America and Pure Storage 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 Pure Storage are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Capital America has no effect on the direction of Pure Storage i.e., Pure Storage and Hyundai go up and down completely randomly.

Pair Corralation between Pure Storage and Hyundai

Given the investment horizon of 90 days Pure Storage is expected to generate 25.42 times more return on investment than Hyundai. However, Pure Storage is 25.42 times more volatile than Hyundai Capital America. It trades about 0.03 of its potential returns per unit of risk. Hyundai Capital America is currently generating about -0.07 per unit of risk. If you would invest  6,381  in Pure Storage on October 10, 2024 and sell it today you would earn a total of  45.00  from holding Pure Storage or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

Pure Storage  vs.  Hyundai Capital America

Pure Storage

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Hyundai Capital America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Capital America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hyundai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pure Storage and Hyundai

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

The idea behind Pure Storage and Hyundai Capital America 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.