Correlation Between System and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both System 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 System and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and Hanjin Transportation Co, you can compare the effects of market volatilities on System 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 System with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Hanjin Transportation.
Diversification Opportunities for System and Hanjin Transportation
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between System and Hanjin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and System 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 System and Application 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 System i.e., System and Hanjin Transportation go up and down completely randomly.
Pair Corralation between System and Hanjin Transportation
Assuming the 90 days trading horizon System and Application is expected to under-perform the Hanjin Transportation. In addition to that, System is 1.75 times more volatile than Hanjin Transportation Co. It trades about -0.01 of its total potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.0 per unit of volatility. If you would invest 2,084,850 in Hanjin Transportation Co on October 27, 2024 and sell it today you would lose (144,850) from holding Hanjin Transportation Co or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Hanjin Transportation Co
Performance |
| Timeline |
| System and Application |
| Hanjin Transportation |
System and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Hanjin Transportation
The main advantage of trading using opposite System and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System 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.| System vs. Sejong Telecom | System vs. Nable Communications | System vs. PJ Metal Co | System vs. Nice Information Telecommunication |
| Hanjin Transportation vs. KB Financial Group | Hanjin Transportation vs. Shinhan Financial Group | Hanjin Transportation vs. Hana Financial | Hanjin Transportation vs. Woori Financial Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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