Correlation Between Korea New and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both Korea New and Hanwha Solutions 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 Korea New and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Hanwha Solutions, you can compare the effects of market volatilities on Korea New and Hanwha Solutions 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 Korea New with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Hanwha Solutions.
Diversification Opportunities for Korea New and Hanwha Solutions
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Hanwha is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and Korea New 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 Korea New Network are associated (or correlated) with Hanwha Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Solutions has no effect on the direction of Korea New i.e., Korea New and Hanwha Solutions go up and down completely randomly.
Pair Corralation between Korea New and Hanwha Solutions
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.8 times more return on investment than Hanwha Solutions. However, Korea New Network is 1.25 times less risky than Hanwha Solutions. It trades about 0.1 of its potential returns per unit of risk. Hanwha Solutions is currently generating about -0.16 per unit of risk. If you would invest 76,400 in Korea New Network on September 23, 2024 and sell it today you would earn a total of 9,100 from holding Korea New Network or generate 11.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Korea New Network vs. Hanwha Solutions
Performance |
Timeline |
Korea New Network |
Hanwha Solutions |
Korea New and Hanwha Solutions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Korea New and Hanwha Solutions
The main advantage of trading using opposite Korea New and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Hanwha Solutions 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 Hanwha Solutions will offset losses from the drop in Hanwha Solutions' long position.Korea New vs. Samsung Electronics Co | Korea New vs. Samsung Electronics Co | Korea New vs. LG Energy Solution | Korea New vs. SK Hynix |
Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. POSCO Holdings | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel |
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 CEOs Directory module to screen CEOs from public companies around the world.
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