Correlation Between Mirae Asset and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Mirae Asset 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 Mirae Asset and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mirae Asset Daewoo and Hanwha Aerospace Co, you can compare the effects of market volatilities on Mirae Asset 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 Mirae Asset with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirae Asset and Hanwha Aerospace.
Diversification Opportunities for Mirae Asset and Hanwha Aerospace
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mirae and Hanwha is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mirae Asset Daewoo and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Mirae Asset 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 Mirae Asset Daewoo 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 Mirae Asset i.e., Mirae Asset and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Mirae Asset and Hanwha Aerospace
Assuming the 90 days trading horizon Mirae Asset is expected to generate 12.36 times less return on investment than Hanwha Aerospace. But when comparing it to its historical volatility, Mirae Asset Daewoo is 1.89 times less risky than Hanwha Aerospace. It trades about 0.02 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 6,669,160 in Hanwha Aerospace Co on August 24, 2024 and sell it today you would earn a total of 31,280,840 from holding Hanwha Aerospace Co or generate 469.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mirae Asset Daewoo vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Mirae Asset Daewoo |
| Hanwha Aerospace |
Mirae Asset and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mirae Asset and Hanwha Aerospace
The main advantage of trading using opposite Mirae Asset and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mirae Asset 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.| Mirae Asset vs. Korea Information Communications | Mirae Asset vs. Shinsegae Information Communication | Mirae Asset vs. Nice Information Telecommunication | Mirae Asset vs. Dongwon Metal Co |
| Hanwha Aerospace vs. Insung Information Co | Hanwha Aerospace vs. Korea Information Engineering | Hanwha Aerospace vs. Samhwa Paint Industrial | Hanwha Aerospace vs. MetaLabs 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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