Correlation Between Hanjin Transportation and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Hanshin Construction 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 Hanjin Transportation and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjin Transportation Co and Hanshin Construction Co, you can compare the effects of market volatilities on Hanjin Transportation and Hanshin Construction 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 Hanjin Transportation with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Hanshin Construction.
Diversification Opportunities for Hanjin Transportation and Hanshin Construction
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanjin and Hanshin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Hanjin Transportation 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 Hanjin Transportation Co are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Hanshin Construction go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Hanshin Construction
Assuming the 90 days trading horizon Hanjin Transportation Co is expected to generate 0.52 times more return on investment than Hanshin Construction. However, Hanjin Transportation Co is 1.94 times less risky than Hanshin Construction. It trades about 0.35 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.1 per unit of risk. If you would invest 1,848,155 in Hanjin Transportation Co on October 16, 2024 and sell it today you would earn a total of 93,845 from holding Hanjin Transportation Co or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Hanshin Construction Co
Performance |
| Timeline |
| Hanjin Transportation |
| Hanshin Construction |
Hanjin Transportation and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Hanshin Construction
The main advantage of trading using opposite Hanjin Transportation and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| Hanjin Transportation vs. Samsung Life Insurance | Hanjin Transportation vs. Daejung Chemicals Metals | Hanjin Transportation vs. Lotte Non Life Insurance | Hanjin Transportation vs. LG Household Healthcare |
| Hanshin Construction vs. Duksan Hi Metal | Hanshin Construction vs. Daejung Chemicals Metals | Hanshin Construction vs. Kukdo Chemical Co | Hanshin Construction vs. Miwon Chemical |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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