Correlation Between Hanwha Solutions and BYON

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

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

Diversification Opportunities for Hanwha Solutions and BYON

0.24

Correlation Coefficient

Hanwha Solutions  BYON

Modest diversification

The 3 months correlation between Hanwha and BYON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON and Hanwha Solutions 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 Hanwha Solutions are associated (or correlated) with BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and BYON go up and down completely randomly.

Pair Corralation between Hanwha Solutions and BYON

Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the BYON. But the stock apears to be less risky and, when comparing its historical volatility, Hanwha Solutions is 1.49 times less risky than BYON. The stock trades about -0.15 of its potential returns per unit of risk. The BYON Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  77,500  in BYON Co on September 14, 2024 and sell it today you would lose (3,200) from holding BYON Co or give up 4.13% of portfolio value over 90 days.

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

Hanwha Solutions  vs.  BYON Co

Hanwha Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanwha Solutions 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.

BYON

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Hanwha Solutions and BYON

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

The idea behind Hanwha Solutions and BYON 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.