Correlation Between Ford and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hanjin Transportation Co, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hanjin Transportation.
Diversification Opportunities for Ford and Hanjin Transportation
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Hanjin is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Ford 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 Ford Motor 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 Ford i.e., Ford and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Ford and Hanjin Transportation
Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.46 times more return on investment than Hanjin Transportation. However, Ford is 3.46 times more volatile than Hanjin Transportation Co. It trades about 0.14 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 965.00 in Ford Motor on November 3, 2024 and sell it today you would earn a total of 43.00 from holding Ford Motor or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Ford Motor vs. Hanjin Transportation Co
Performance |
| Timeline |
| Ford Motor |
| Hanjin Transportation |
Ford and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hanjin Transportation
The main advantage of trading using opposite Ford and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Hanjin Transportation Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hanjin Transportation vs. Korea Air Svc | Hanjin Transportation vs. Orbitech Co | Hanjin Transportation vs. SS TECH | Hanjin Transportation vs. Solution Advanced Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |