Correlation Between Dow Jones and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Hanjin Transportation Co, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hanjin Transportation.
Diversification Opportunities for Dow Jones and Hanjin Transportation
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Hanjin is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Dow Jones and Hanjin Transportation
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.33 times less return on investment than Hanjin Transportation. In addition to that, Dow Jones is 1.04 times more volatile than Hanjin Transportation Co. It trades about 0.1 of its total potential returns per unit of risk. Hanjin Transportation Co is currently generating about 0.23 per unit of volatility. If you would invest 1,877,244 in Hanjin Transportation Co on October 22, 2024 and sell it today you would earn a total of 57,756 from holding Hanjin Transportation Co or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hanjin Transportation Co
Performance |
| Timeline |
Dow Jones and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hanjin Transportation Co
Pair trading matchups for Hanjin Transportation
Pair Trading with Dow Jones and Hanjin Transportation
The main advantage of trading using opposite Dow Jones and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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