Correlation Between Dongwoo Farm and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm 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 Dongwoo Farm and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Hanjin Transportation Co, you can compare the effects of market volatilities on Dongwoo Farm 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 Dongwoo Farm with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Hanjin Transportation.
Diversification Opportunities for Dongwoo Farm and Hanjin Transportation
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and Hanjin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Dongwoo Farm 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 Dongwoo Farm To 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 Dongwoo Farm i.e., Dongwoo Farm and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Hanjin Transportation
Assuming the 90 days trading horizon Dongwoo Farm is expected to generate 2.74 times less return on investment than Hanjin Transportation. In addition to that, Dongwoo Farm is 1.06 times more volatile than Hanjin Transportation Co. It trades about 0.06 of its total potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.17 per unit of volatility. If you would invest 1,846,000 in Hanjin Transportation Co on September 26, 2024 and sell it today you would earn a total of 94,000 from holding Hanjin Transportation Co or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Hanjin Transportation Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Hanjin Transportation |
Dongwoo Farm and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Hanjin Transportation
The main advantage of trading using opposite Dongwoo Farm and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm 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.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food | Dongwoo Farm vs. Wooyang Co |
| Hanjin Transportation vs. Daejoo Electronic Materials | Hanjin Transportation vs. Union Materials Corp | Hanjin Transportation vs. Dongil Metal Co | Hanjin Transportation vs. PI Advanced Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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