Correlation Between Hanjin Transportation and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Solus Advanced 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 Solus Advanced 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 Solus Advanced Materials, you can compare the effects of market volatilities on Hanjin Transportation and Solus Advanced 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 Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Solus Advanced.
Diversification Opportunities for Hanjin Transportation and Solus Advanced
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanjin and Solus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials 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 Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Solus Advanced go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Solus Advanced
Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 1.92 times less return on investment than Solus Advanced. But when comparing it to its historical volatility, Hanjin Transportation Co is 3.98 times less risky than Solus Advanced. It trades about 0.59 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 803,000 in Solus Advanced Materials on October 11, 2024 and sell it today you would earn a total of 149,000 from holding Solus Advanced Materials or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Solus Advanced Materials
Performance |
| Timeline |
| Hanjin Transportation |
| Solus Advanced Materials |
Hanjin Transportation and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Solus Advanced
The main advantage of trading using opposite Hanjin Transportation and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| Hanjin Transportation vs. Samyoung Electronics Co | Hanjin Transportation vs. Youngsin Metal Industrial | Hanjin Transportation vs. Samji Electronics Co | Hanjin Transportation vs. LG Household Healthcare |
| Solus Advanced vs. Jeju Semiconductor Corp | Solus Advanced vs. Leaders Technology Investment | Solus Advanced vs. DB Insurance Co | Solus Advanced vs. KTB Investment Securities |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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