Correlation Between Hanjin Transportation and Robotis CoLtd

Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Robotis CoLtd 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 Robotis CoLtd 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 Robotis CoLtd, you can compare the effects of market volatilities on Hanjin Transportation and Robotis CoLtd 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 Robotis CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Robotis CoLtd.

Diversification Opportunities for Hanjin Transportation and Robotis CoLtd

0.63

Correlation Coefficient

Hanjin Transportation  Robotis CoLtd

Poor diversification

The 3 months correlation between Hanjin and Robotis is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Robotis CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robotis CoLtd 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 Robotis CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robotis CoLtd has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Robotis CoLtd go up and down completely randomly.

Pair Corralation between Hanjin Transportation and Robotis CoLtd

Assuming the 90 days trading horizon Hanjin Transportation is expected to generate 26.45 times less return on investment than Robotis CoLtd. But when comparing it to its historical volatility, Hanjin Transportation Co is 4.27 times less risky than Robotis CoLtd. It trades about 0.04 of its potential returns per unit of risk. Robotis CoLtd is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,800,000  in Robotis CoLtd on October 22, 2024 and sell it today you would earn a total of  1,725,000  from holding Robotis CoLtd or generate 95.83% return on investment over 90 days.

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

Hanjin Transportation Co  vs.  Robotis CoLtd

Hanjin Transportation

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanjin Transportation Co are ranked lower than 3 (%) 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.

Robotis CoLtd

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Robotis CoLtd are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robotis CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanjin Transportation and Robotis CoLtd

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

The idea behind Hanjin Transportation Co and Robotis CoLtd 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.