Correlation Between KMH Hitech and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both KMH Hitech 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 KMH Hitech and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KMH Hitech Co and Hanjin Transportation Co, you can compare the effects of market volatilities on KMH Hitech 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 KMH Hitech with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of KMH Hitech and Hanjin Transportation.
Diversification Opportunities for KMH Hitech and Hanjin Transportation
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KMH and Hanjin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KMH Hitech Co and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and KMH Hitech 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 KMH Hitech Co 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 KMH Hitech i.e., KMH Hitech and Hanjin Transportation go up and down completely randomly.
Pair Corralation between KMH Hitech and Hanjin Transportation
Assuming the 90 days trading horizon KMH Hitech Co is expected to generate 3.9 times more return on investment than Hanjin Transportation. However, KMH Hitech is 3.9 times more volatile than Hanjin Transportation Co. It trades about 0.09 of its potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.06 per unit of risk. If you would invest 93,000 in KMH Hitech Co on November 7, 2024 and sell it today you would earn a total of 2,800 from holding KMH Hitech Co or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
KMH Hitech Co vs. Hanjin Transportation Co
Performance |
| Timeline |
| KMH Hitech |
| Hanjin Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
KMH Hitech and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KMH Hitech and Hanjin Transportation
The main advantage of trading using opposite KMH Hitech and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KMH Hitech 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.| KMH Hitech vs. AeroSpace Technology of | KMH Hitech vs. Puloon Technology | KMH Hitech vs. INFINITT Healthcare Co | KMH Hitech vs. Settlebank |
| Hanjin Transportation vs. Seoul Electronics Telecom | Hanjin Transportation vs. Jeju Bank | Hanjin Transportation vs. Nasmedia Co | Hanjin Transportation vs. Kaonmedia Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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