Correlation Between Alton Sports and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Alton Sports 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 Alton Sports and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and Hanjin Transportation Co, you can compare the effects of market volatilities on Alton Sports 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 Alton Sports with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Hanjin Transportation.
Diversification Opportunities for Alton Sports and Hanjin Transportation
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alton and Hanjin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Alton Sports 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 Alton Sports CoLtd 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 Alton Sports i.e., Alton Sports and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Alton Sports and Hanjin Transportation
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to generate 1.27 times more return on investment than Hanjin Transportation. However, Alton Sports is 1.27 times more volatile than Hanjin Transportation Co. It trades about 0.45 of its potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.23 per unit of risk. If you would invest 140,400 in Alton Sports CoLtd on October 24, 2024 and sell it today you would earn a total of 11,300 from holding Alton Sports CoLtd or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. Hanjin Transportation Co
Performance |
| Timeline |
| Alton Sports CoLtd |
| Hanjin Transportation |
Alton Sports and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and Hanjin Transportation
The main advantage of trading using opposite Alton Sports and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports 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.| Alton Sports vs. Daiyang Metal Co | Alton Sports vs. Dongbang Transport Logistics | Alton Sports vs. Sungdo Engineering Construction | Alton Sports vs. Camus Engineering Construction |
| Hanjin Transportation vs. Daewon Media Co | Hanjin Transportation vs. LG Household Healthcare | Hanjin Transportation vs. YG Entertainment | Hanjin Transportation vs. JYP Entertainment 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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