Correlation Between Hanjin Transportation and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Seoul Electronics 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 Seoul Electronics 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 Seoul Electronics Telecom, you can compare the effects of market volatilities on Hanjin Transportation and Seoul Electronics 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Seoul Electronics.
Diversification Opportunities for Hanjin Transportation and Seoul Electronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjin and Seoul is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Seoul Electronics go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Seoul Electronics
Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 13.95 times less return on investment than Seoul Electronics. But when comparing it to its historical volatility, Hanjin Transportation Co is 15.47 times less risky than Seoul Electronics. It trades about 0.13 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 23,800 in Seoul Electronics Telecom on November 27, 2024 and sell it today you would earn a total of 2,600 from holding Seoul Electronics Telecom or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Hanjin Transportation |
| Seoul Electronics Telecom |
Hanjin Transportation and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Seoul Electronics
The main advantage of trading using opposite Hanjin Transportation and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Hanjin Transportation vs. Hannong Chemicals | Hanjin Transportation vs. Jeju Beer Co | Hanjin Transportation vs. Hanil Chemical Ind | Hanjin Transportation vs. Kumho Petro Chemical |
| Seoul Electronics vs. Seoul Semiconductor Co | Seoul Electronics vs. Hanmi Semiconductor Co | Seoul Electronics vs. Tway Air Co | Seoul Electronics vs. Cloud Air CoLtd |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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