Correlation Between Cheryong Industrial and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial 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 Cheryong Industrial and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Hanjin Transportation Co, you can compare the effects of market volatilities on Cheryong Industrial 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 Cheryong Industrial with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Hanjin Transportation.
Diversification Opportunities for Cheryong Industrial and Hanjin Transportation
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cheryong and Hanjin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial i.e., Cheryong Industrial and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Hanjin Transportation
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 2.43 times more return on investment than Hanjin Transportation. However, Cheryong Industrial is 2.43 times more volatile than Hanjin Transportation Co. It trades about 0.05 of its potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.0 per unit of risk. If you would invest 299,888 in Cheryong Industrial CoLtd on October 13, 2024 and sell it today you would earn a total of 295,112 from holding Cheryong Industrial CoLtd or generate 98.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Hanjin Transportation Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Hanjin Transportation |
Cheryong Industrial and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Hanjin Transportation
The main advantage of trading using opposite Cheryong Industrial and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial 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.| Cheryong Industrial vs. Shin Steel Co | Cheryong Industrial vs. Formetal Co | Cheryong Industrial vs. Jeil Steel Mfg | Cheryong Industrial vs. Dongil Metal Co |
| Hanjin Transportation vs. RFTech Co | Hanjin Transportation vs. BNK Financial Group | Hanjin Transportation vs. Hana Financial | Hanjin Transportation vs. Samsung Life Insurance |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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