Correlation Between Hanjin Transportation and Digital Power
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on Hanjin Transportation and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Digital Power.
Diversification Opportunities for Hanjin Transportation and Digital Power
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjin and Digital is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Digital Power go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Digital Power
Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 20.69 times less return on investment than Digital Power. But when comparing it to its historical volatility, Hanjin Transportation Co is 1.32 times less risky than Digital Power. It trades about 0.0 of its potential returns per unit of risk. Digital Power Communications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 515,070 in Digital Power Communications on September 26, 2024 and sell it today you would earn a total of 369,930 from holding Digital Power Communications or generate 71.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanjin Transportation Co vs. Digital Power Communications
Performance |
Timeline |
Hanjin Transportation |
Digital Power Commun |
Hanjin Transportation and Digital Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanjin Transportation and Digital Power
The main advantage of trading using opposite Hanjin Transportation and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.Hanjin Transportation vs. Daejoo Electronic Materials | Hanjin Transportation vs. Union Materials Corp | Hanjin Transportation vs. Dongil Metal Co | Hanjin Transportation vs. PI Advanced Materials |
Digital Power vs. Seoul Semiconductor Co | Digital Power vs. Dongbang Transport Logistics | Digital Power vs. Hanjin Transportation Co | Digital Power vs. Atinum Investment Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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