Correlation Between American Funds and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Hanjin Transportation Co, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hanjin Transportation.
Diversification Opportunities for American Funds and Hanjin Transportation
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Hanjin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and American Funds 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 American Funds Fundamental 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 American Funds i.e., American Funds and Hanjin Transportation go up and down completely randomly.
Pair Corralation between American Funds and Hanjin Transportation
Assuming the 90 days horizon American Funds Fundamental is expected to generate 2.02 times more return on investment than Hanjin Transportation. However, American Funds is 2.02 times more volatile than Hanjin Transportation Co. It trades about 0.2 of its potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.18 per unit of risk. If you would invest 8,096 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 322.00 from holding American Funds Fundamental or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Hanjin Transportation Co
Performance |
| Timeline |
| American Funds Funda |
| Hanjin Transportation |
American Funds and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hanjin Transportation
The main advantage of trading using opposite American Funds and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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