Correlation Between Hanwha InvestmentSecuri and Cho Bi
Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and Cho Bi 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 InvestmentSecuri and Cho Bi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha InvestmentSecurities Co and Cho Bi, you can compare the effects of market volatilities on Hanwha InvestmentSecuri and Cho Bi 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 InvestmentSecuri with a short position of Cho Bi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha InvestmentSecuri and Cho Bi.
Diversification Opportunities for Hanwha InvestmentSecuri and Cho Bi
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanwha and Cho is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and Cho Bi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Bi and Hanwha InvestmentSecuri 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 InvestmentSecurities Co are associated (or correlated) with Cho Bi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Bi has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and Cho Bi go up and down completely randomly.
Pair Corralation between Hanwha InvestmentSecuri and Cho Bi
Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to under-perform the Cho Bi. In addition to that, Hanwha InvestmentSecuri is 2.87 times more volatile than Cho Bi. It trades about -0.01 of its total potential returns per unit of risk. Cho Bi is currently generating about 0.14 per unit of volatility. If you would invest 1,009,000 in Cho Bi on August 30, 2024 and sell it today you would earn a total of 68,000 from holding Cho Bi or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hanwha InvestmentSecurities Co vs. Cho Bi
Performance |
| Timeline |
| Hanwha InvestmentSecuri |
| Cho Bi |
Hanwha InvestmentSecuri and Cho Bi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha InvestmentSecuri and Cho Bi
The main advantage of trading using opposite Hanwha InvestmentSecuri and Cho Bi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha InvestmentSecuri position performs unexpectedly, Cho Bi 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 Cho Bi will offset losses from the drop in Cho Bi's long position.The idea behind Hanwha InvestmentSecurities Co and Cho Bi 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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