Correlation Between Sam Yang and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Sam Yang and Hanwha Aerospace 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 Sam Yang and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Yang Foods and Hanwha Aerospace Co, you can compare the effects of market volatilities on Sam Yang and Hanwha Aerospace 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 Sam Yang with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and Hanwha Aerospace.
Diversification Opportunities for Sam Yang and Hanwha Aerospace
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sam and Hanwha is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Sam Yang 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 Sam Yang Foods are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of Sam Yang i.e., Sam Yang and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Sam Yang and Hanwha Aerospace
Assuming the 90 days trading horizon Sam Yang is expected to generate 12.74 times less return on investment than Hanwha Aerospace. But when comparing it to its historical volatility, Sam Yang Foods is 1.08 times less risky than Hanwha Aerospace. It trades about 0.01 of its potential returns per unit of risk. Hanwha Aerospace Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20,950,000 in Hanwha Aerospace Co on September 4, 2024 and sell it today you would earn a total of 12,900,000 from holding Hanwha Aerospace Co or generate 61.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Yang Foods vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Sam Yang Foods |
| Hanwha Aerospace |
Sam Yang and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Yang and Hanwha Aerospace
The main advantage of trading using opposite Sam Yang and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang position performs unexpectedly, Hanwha Aerospace 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 Aerospace will offset losses from the drop in Hanwha Aerospace's long position.| Sam Yang vs. LG Display | Sam Yang vs. Hyundai Motor | Sam Yang vs. Hyundai Motor Co | Sam Yang vs. Hyundai Motor Co |
| Hanwha Aerospace vs. Sam Yang Foods | Hanwha Aerospace vs. Green Cross Medical | Hanwha Aerospace vs. Shinsegae Food | Hanwha Aerospace vs. ITM Semiconductor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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