Correlation Between Hanshin Construction and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Daewon 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 Hanshin Construction and Daewon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Daewon Chemical Co, you can compare the effects of market volatilities on Hanshin Construction and Daewon 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 Hanshin Construction with a short position of Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Daewon Chemical.
Diversification Opportunities for Hanshin Construction and Daewon Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanshin and Daewon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Chemical and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Daewon Chemical go up and down completely randomly.
Pair Corralation between Hanshin Construction and Daewon Chemical
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 0.61 times more return on investment than Daewon Chemical. However, Hanshin Construction Co is 1.64 times less risky than Daewon Chemical. It trades about -0.02 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about -0.07 per unit of risk. If you would invest 815,722 in Hanshin Construction Co on October 16, 2024 and sell it today you would lose (167,722) from holding Hanshin Construction Co or give up 20.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanshin Construction Co vs. Daewon Chemical Co
Performance |
Timeline |
Hanshin Construction |
Daewon Chemical |
Hanshin Construction and Daewon Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanshin Construction and Daewon Chemical
The main advantage of trading using opposite Hanshin Construction and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Daewon 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 Daewon Chemical will offset losses from the drop in Daewon Chemical's long position.Hanshin Construction vs. System and Application | Hanshin Construction vs. SCI Information Service | Hanshin Construction vs. Hanjin Transportation Co | Hanshin Construction vs. UJU Electronics Co |
Daewon Chemical vs. Keyang Electric Machinery | Daewon Chemical vs. Hanshin Construction Co | Daewon Chemical vs. Sewoon Medical Co | Daewon Chemical vs. Duksan Hi Metal |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Commodity Directory Find actively traded commodities issued by global exchanges |