Correlation Between Samsung Electronics and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hanwha 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 Samsung Electronics and Hanwha Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Hanwha Chemical Corp, you can compare the effects of market volatilities on Samsung Electronics and Hanwha 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 Samsung Electronics with a short position of Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hanwha Chemical.
Diversification Opportunities for Samsung Electronics and Hanwha Chemical
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and Hanwha is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hanwha Chemical go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hanwha Chemical
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hanwha Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 3.57 times less risky than Hanwha Chemical. The stock trades about -0.02 of its potential returns per unit of risk. The Hanwha Chemical Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,612,000 in Hanwha Chemical Corp on October 29, 2024 and sell it today you would earn a total of 398,000 from holding Hanwha Chemical Corp or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hanwha Chemical Corp
Performance |
| Timeline |
| Samsung Electronics |
| Hanwha Chemical Corp |
Samsung Electronics and Hanwha Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hanwha Chemical
The main advantage of trading using opposite Samsung Electronics and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hanwha 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 Hanwha Chemical will offset losses from the drop in Hanwha Chemical's long position.| Samsung Electronics vs. Lion Chemtech Co | Samsung Electronics vs. INSUN Environmental New | Samsung Electronics vs. Wonil Special Steel | Samsung Electronics vs. Moonbae Steel |
| Hanwha Chemical vs. Hotel Shilla Co | Hanwha Chemical vs. Chorokbaem Healthcare Co | Hanwha Chemical vs. Ssangyong Information Communication | Hanwha Chemical vs. Samsung Publishing 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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