Correlation Between Daewoo SBI and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Hanjin Transportation Co, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Hanjin Transportation.
Diversification Opportunities for Daewoo SBI and Hanjin Transportation
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Hanjin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Daewoo SBI and Hanjin Transportation
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 3.26 times more return on investment than Hanjin Transportation. However, Daewoo SBI is 3.26 times more volatile than Hanjin Transportation Co. It trades about 0.11 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 280,000 in Daewoo SBI SPAC on October 22, 2024 and sell it today you would earn a total of 12,000 from holding Daewoo SBI SPAC or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Hanjin Transportation Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Hanjin Transportation |
Daewoo SBI and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Hanjin Transportation
The main advantage of trading using opposite Daewoo SBI and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. Tway Air Co | Daewoo SBI vs. Sempio Foods Co | Daewoo SBI vs. Daou Data Corp | Daewoo SBI vs. Sam Yang Foods |
| Hanjin Transportation vs. Cuckoo Homesys Co | Hanjin Transportation vs. Hankook Furniture Co | Hanjin Transportation vs. Ecoplastic | Hanjin Transportation vs. Daejoo Electronic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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