Correlation Between MohenzCoLtd and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both MohenzCoLtd and Hanwha Solutions 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 MohenzCoLtd and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MohenzCoLtd and Hanwha Solutions, you can compare the effects of market volatilities on MohenzCoLtd and Hanwha Solutions 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 MohenzCoLtd with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of MohenzCoLtd and Hanwha Solutions.
Diversification Opportunities for MohenzCoLtd and Hanwha Solutions
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MohenzCoLtd and Hanwha is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding MohenzCoLtd and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and MohenzCoLtd 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 MohenzCoLtd are associated (or correlated) with Hanwha Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Solutions has no effect on the direction of MohenzCoLtd i.e., MohenzCoLtd and Hanwha Solutions go up and down completely randomly.
Pair Corralation between MohenzCoLtd and Hanwha Solutions
Assuming the 90 days trading horizon MohenzCoLtd is expected to generate 2.02 times less return on investment than Hanwha Solutions. But when comparing it to its historical volatility, MohenzCoLtd is 3.19 times less risky than Hanwha Solutions. It trades about 0.18 of its potential returns per unit of risk. Hanwha Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,977,000 in Hanwha Solutions on November 28, 2024 and sell it today you would earn a total of 113,000 from holding Hanwha Solutions or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MohenzCoLtd vs. Hanwha Solutions
Performance |
| Timeline |
| MohenzCoLtd |
| Hanwha Solutions |
MohenzCoLtd and Hanwha Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MohenzCoLtd and Hanwha Solutions
The main advantage of trading using opposite MohenzCoLtd and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MohenzCoLtd position performs unexpectedly, Hanwha Solutions 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 Solutions will offset losses from the drop in Hanwha Solutions' long position.| MohenzCoLtd vs. Sung Bo Chemicals | MohenzCoLtd vs. DB Financial Investment | MohenzCoLtd vs. Hanwha InvestmentSecurities Co | MohenzCoLtd vs. Aju IB Investment |
| Hanwha Solutions vs. Tae Kyung Chemical | Hanwha Solutions vs. Alton Sports CoLtd | Hanwha Solutions vs. Dongnam Chemical Co | Hanwha Solutions vs. Silicon2 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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