Correlation Between Hanjin Transportation and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Kyeryong 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 Kyeryong 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 Kyeryong Construction Industrial, you can compare the effects of market volatilities on Hanjin Transportation and Kyeryong 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 Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Kyeryong Construction.
Diversification Opportunities for Hanjin Transportation and Kyeryong Construction
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjin and Kyeryong is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong 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 Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Kyeryong Construction
Assuming the 90 days trading horizon Hanjin Transportation Co is expected to generate 0.71 times more return on investment than Kyeryong Construction. However, Hanjin Transportation Co is 1.41 times less risky than Kyeryong Construction. It trades about 0.17 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about 0.03 per unit of risk. If you would invest 1,846,000 in Hanjin Transportation Co on September 26, 2024 and sell it today you would earn a total of 94,000 from holding Hanjin Transportation Co or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Kyeryong Construction Industri
Performance |
| Timeline |
| Hanjin Transportation |
| Kyeryong Construction |
Hanjin Transportation and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Kyeryong Construction
The main advantage of trading using opposite Hanjin Transportation and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Kyeryong 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| Hanjin Transportation vs. Daejoo Electronic Materials | Hanjin Transportation vs. Union Materials Corp | Hanjin Transportation vs. Dongil Metal Co | Hanjin Transportation vs. PI Advanced Materials |
| Kyeryong Construction vs. AptaBio Therapeutics | Kyeryong Construction vs. Wonbang Tech Co | Kyeryong Construction vs. Busan Industrial Co | Kyeryong Construction vs. Busan Ind |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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