Correlation Between Jeju Semiconductor and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Jeju Semiconductor 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 Jeju Semiconductor and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Semiconductor Corp and Hanjin Transportation Co, you can compare the effects of market volatilities on Jeju Semiconductor 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 Jeju Semiconductor with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Semiconductor and Hanjin Transportation.
Diversification Opportunities for Jeju Semiconductor and Hanjin Transportation
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jeju and Hanjin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Semiconductor Corp and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Jeju Semiconductor 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 Jeju Semiconductor Corp 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 Jeju Semiconductor i.e., Jeju Semiconductor and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Jeju Semiconductor and Hanjin Transportation
Assuming the 90 days trading horizon Jeju Semiconductor Corp is expected to under-perform the Hanjin Transportation. In addition to that, Jeju Semiconductor is 2.54 times more volatile than Hanjin Transportation Co. It trades about -0.08 of its total potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.13 per unit of volatility. If you would invest 1,840,000 in Hanjin Transportation Co on September 22, 2024 and sell it today you would earn a total of 72,000 from holding Hanjin Transportation Co or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Semiconductor Corp vs. Hanjin Transportation Co
Performance |
| Timeline |
| Jeju Semiconductor Corp |
| Hanjin Transportation |
Jeju Semiconductor and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Semiconductor and Hanjin Transportation
The main advantage of trading using opposite Jeju Semiconductor and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Semiconductor 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.| Jeju Semiconductor vs. Narae Nanotech Corp | Jeju Semiconductor vs. Organic Special Pet | Jeju Semiconductor vs. Amogreentech Co | Jeju Semiconductor vs. Eagle Veterinary Technology |
| Hanjin Transportation vs. Kyeryong Construction Industrial | Hanjin Transportation vs. SK Telecom Co | Hanjin Transportation vs. Sejong Telecom | Hanjin Transportation vs. Jeju Semiconductor Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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