Correlation Between Hanjin Transportation and KTB Investment
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and KTB Investment 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 KTB Investment 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 KTB Investment Securities, you can compare the effects of market volatilities on Hanjin Transportation and KTB Investment 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 KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and KTB Investment.
Diversification Opportunities for Hanjin Transportation and KTB Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjin and KTB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities 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 KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and KTB Investment go up and down completely randomly.
Pair Corralation between Hanjin Transportation and KTB Investment
Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 3.37 times less return on investment than KTB Investment. But when comparing it to its historical volatility, Hanjin Transportation Co is 6.52 times less risky than KTB Investment. It trades about 0.3 of its potential returns per unit of risk. KTB Investment Securities is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 260,000 in KTB Investment Securities on October 17, 2024 and sell it today you would earn a total of 35,000 from holding KTB Investment Securities or generate 13.46% 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. KTB Investment Securities
Performance |
| Timeline |
| Hanjin Transportation |
| KTB Investment Securities |
Hanjin Transportation and KTB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and KTB Investment
The main advantage of trading using opposite Hanjin Transportation and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment's long position.| Hanjin Transportation vs. Choil Aluminum | Hanjin Transportation vs. Daejung Chemicals Metals | Hanjin Transportation vs. CU Medical Systems | Hanjin Transportation vs. Daehan Steel |
| KTB Investment vs. Hanjin Transportation Co | KTB Investment vs. Jeil Steel Mfg | KTB Investment vs. Korea Steel Co | KTB Investment vs. Nice Information Telecommunication |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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