Correlation Between Seoul Electronics and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Seoul Electronics and Hanjin Transportation 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 Seoul Electronics and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Electronics Telecom and Hanjin Transportation Co, you can compare the effects of market volatilities on Seoul Electronics and Hanjin Transportation 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 Seoul Electronics with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Electronics and Hanjin Transportation.
Diversification Opportunities for Seoul Electronics and Hanjin Transportation
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Hanjin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Electronics Telecom and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Seoul Electronics 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 Seoul Electronics Telecom are associated (or correlated) with Hanjin Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjin Transportation has no effect on the direction of Seoul Electronics i.e., Seoul Electronics and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Seoul Electronics and Hanjin Transportation
Assuming the 90 days trading horizon Seoul Electronics Telecom is expected to generate 15.47 times more return on investment than Hanjin Transportation. However, Seoul Electronics is 15.47 times more volatile than Hanjin Transportation Co. It trades about 0.11 of its potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.13 per unit of risk. 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 |
Seoul Electronics Telecom vs. Hanjin Transportation Co
Performance |
| Timeline |
| Seoul Electronics Telecom |
| Hanjin Transportation |
Seoul Electronics and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Electronics and Hanjin Transportation
The main advantage of trading using opposite Seoul Electronics and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Electronics position performs unexpectedly, Hanjin Transportation 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 Hanjin Transportation will offset losses from the drop in Hanjin Transportation's long position.| Seoul Electronics vs. Seoul Semiconductor Co | Seoul Electronics vs. Hanmi Semiconductor Co | Seoul Electronics vs. Tway Air Co | Seoul Electronics vs. Cloud Air CoLtd |
| Hanjin Transportation vs. Hannong Chemicals | Hanjin Transportation vs. Jeju Beer Co | Hanjin Transportation vs. Hanil Chemical Ind | Hanjin Transportation vs. Kumho Petro Chemical |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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