Correlation Between Hanjin Transportation and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Hanjin Transportation and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Namhwa Industrial.
Diversification Opportunities for Hanjin Transportation and Namhwa Industrial
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanjin and Namhwa is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Namhwa Industrial
Assuming the 90 days trading horizon Hanjin Transportation Co is expected to generate 0.37 times more return on investment than Namhwa Industrial. However, Hanjin Transportation Co is 2.67 times less risky than Namhwa Industrial. It trades about 0.51 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.12 per unit of risk. If you would invest 1,825,853 in Hanjin Transportation Co on October 12, 2024 and sell it today you would earn a total of 132,147 from holding Hanjin Transportation Co or generate 7.24% 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. Namhwa Industrial Co
Performance |
| Timeline |
| Hanjin Transportation |
| Namhwa Industrial |
Hanjin Transportation and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Namhwa Industrial
The main advantage of trading using opposite Hanjin Transportation and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Hanjin Transportation vs. Amogreentech Co | Hanjin Transportation vs. FNSTech Co | Hanjin Transportation vs. Jeju Air Co | Hanjin Transportation vs. Jin Air Co |
| Namhwa Industrial vs. Woori Technology Investment | Namhwa Industrial vs. Hanjin Transportation Co | Namhwa Industrial vs. TS Investment Corp | Namhwa Industrial vs. Taegu Broadcasting |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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