Correlation Between Hanjin Transportation and Ssangyong Information

Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Ssangyong Information 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 Hanjin Transportation and Ssangyong Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanjin Transportation Co and Ssangyong Information Communication, you can compare the effects of market volatilities on Hanjin Transportation and Ssangyong Information 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 Hanjin Transportation with a short position of Ssangyong Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Ssangyong Information.

Diversification Opportunities for Hanjin Transportation and Ssangyong Information

0.22

Correlation Coefficient

Hanjin Transportation  Ssangyong Information

Modest diversification

The 3 months correlation between Hanjin and Ssangyong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information and Hanjin Transportation 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 Hanjin Transportation Co are associated (or correlated) with Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Ssangyong Information go up and down completely randomly.

Pair Corralation between Hanjin Transportation and Ssangyong Information

Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 1.16 times less return on investment than Ssangyong Information. But when comparing it to its historical volatility, Hanjin Transportation Co is 1.54 times less risky than Ssangyong Information. It trades about 0.13 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  62,300  in Ssangyong Information Communication on September 21, 2024 and sell it today you would earn a total of  2,500  from holding Ssangyong Information Communication or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hanjin Transportation Co  vs.  Ssangyong Information Communic

Hanjin Transportation

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanjin Transportation Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hanjin Transportation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssangyong Information

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ssangyong Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanjin Transportation and Ssangyong Information

The main advantage of trading using opposite Hanjin Transportation and Ssangyong Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Ssangyong Information 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 Ssangyong Information will offset losses from the drop in Ssangyong Information's long position.

The idea behind Hanjin Transportation Co and Ssangyong Information Communication 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.