Correlation Between Visa and Hanjin Transportation
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Hanjin Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Hanjin Transportation Co, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Hanjin Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hanjin Transportation.
Diversification Opportunities for Visa and Hanjin Transportation
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and Hanjin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hanjin Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjin Transportation and Visa 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 Visa Class A 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 Visa i.e., Visa and Hanjin Transportation go up and down completely randomly.
Pair Corralation between Visa and Hanjin Transportation
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.9 times more return on investment than Hanjin Transportation. However, Visa is 1.9 times more volatile than Hanjin Transportation Co. It trades about 0.45 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 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Visa Class A vs. Hanjin Transportation Co
Performance |
| Timeline |
| Visa Class A |
| Hanjin Transportation |
Visa and Hanjin Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hanjin Transportation
The main advantage of trading using opposite Visa and Hanjin Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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