Correlation Between Taewoong Logistics and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Taewoong Logistics and Hanwha Aerospace 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 Taewoong Logistics and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taewoong Logistics CoLtd and Hanwha Aerospace Co, you can compare the effects of market volatilities on Taewoong Logistics and Hanwha Aerospace 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 Taewoong Logistics with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taewoong Logistics and Hanwha Aerospace.
Diversification Opportunities for Taewoong Logistics and Hanwha Aerospace
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taewoong and Hanwha is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Taewoong Logistics 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 Taewoong Logistics CoLtd are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of Taewoong Logistics i.e., Taewoong Logistics and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Taewoong Logistics and Hanwha Aerospace
Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to generate 0.6 times more return on investment than Hanwha Aerospace. However, Taewoong Logistics CoLtd is 1.67 times less risky than Hanwha Aerospace. It trades about 0.17 of its potential returns per unit of risk. Hanwha Aerospace Co is currently generating about -0.05 per unit of risk. If you would invest 285,500 in Taewoong Logistics CoLtd on August 28, 2024 and sell it today you would earn a total of 21,000 from holding Taewoong Logistics CoLtd or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taewoong Logistics CoLtd vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Taewoong Logistics CoLtd |
| Hanwha Aerospace |
Taewoong Logistics and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taewoong Logistics and Hanwha Aerospace
The main advantage of trading using opposite Taewoong Logistics and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taewoong Logistics position performs unexpectedly, Hanwha Aerospace 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 Hanwha Aerospace will offset losses from the drop in Hanwha Aerospace's long position.| Taewoong Logistics vs. Busan Industrial Co | Taewoong Logistics vs. Busan Ind | Taewoong Logistics vs. Mirae Asset Daewoo | Taewoong Logistics vs. Shinhan WTI Futures |
| Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. Hyundai Motor Co | Hanwha Aerospace vs. Hyundai Motor |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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