Correlation Between SH Energy and Hansol Chemical

Can any of the company-specific risk be diversified away by investing in both SH Energy and Hansol Chemical 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 SH Energy and Hansol Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SH Energy Chemical and Hansol Chemical Co, you can compare the effects of market volatilities on SH Energy and Hansol Chemical 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 SH Energy with a short position of Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Hansol Chemical.

Diversification Opportunities for SH Energy and Hansol Chemical

0.17

Correlation Coefficient

SH Energy  Hansol Chemical

Average diversification

The 3 months correlation between 002360 and Hansol is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and SH Energy 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 SH Energy Chemical are associated (or correlated) with Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of SH Energy i.e., SH Energy and Hansol Chemical go up and down completely randomly.

Pair Corralation between SH Energy and Hansol Chemical

Assuming the 90 days trading horizon SH Energy Chemical is expected to generate 1.03 times more return on investment than Hansol Chemical. However, SH Energy is 1.03 times more volatile than Hansol Chemical Co. It trades about -0.02 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.1 per unit of risk. If you would invest  64,472  in SH Energy Chemical on September 12, 2024 and sell it today you would lose (12,672) from holding SH Energy Chemical or give up 19.66% of portfolio value over 90 days.

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

SH Energy Chemical  vs.  Hansol Chemical Co

SH Energy Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SH Energy Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SH Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hansol Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansol Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SH Energy and Hansol Chemical

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

The idea behind SH Energy Chemical and Hansol Chemical 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.