Correlation Between Hanil Chemical and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Hanil Chemical and Busan Ind 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 Hanil Chemical and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanil Chemical Ind and Busan Ind, you can compare the effects of market volatilities on Hanil Chemical and Busan Ind 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 Hanil Chemical with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanil Chemical and Busan Ind.
Diversification Opportunities for Hanil Chemical and Busan Ind
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanil and Busan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hanil Chemical Ind and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Hanil Chemical 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 Hanil Chemical Ind are associated (or correlated) with Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Hanil Chemical i.e., Hanil Chemical and Busan Ind go up and down completely randomly.
Pair Corralation between Hanil Chemical and Busan Ind
Assuming the 90 days trading horizon Hanil Chemical Ind is expected to generate 0.9 times more return on investment than Busan Ind. However, Hanil Chemical Ind is 1.11 times less risky than Busan Ind. It trades about 0.05 of its potential returns per unit of risk. Busan Ind is currently generating about 0.03 per unit of risk. If you would invest 1,127,000 in Hanil Chemical Ind on November 6, 2024 and sell it today you would earn a total of 16,000 from holding Hanil Chemical Ind or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanil Chemical Ind vs. Busan Ind
Performance |
| Timeline |
| Hanil Chemical Ind |
| Busan Ind |
Hanil Chemical and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanil Chemical and Busan Ind
The main advantage of trading using opposite Hanil Chemical and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanil Chemical position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's long position.| Hanil Chemical vs. LG Chemicals | Hanil Chemical vs. POSCO Holdings | Hanil Chemical vs. Hanwha Solutions | Hanil Chemical vs. Lotte Chemical Corp |
| Busan Ind vs. Sempio Foods Co | Busan Ind vs. Sung Bo Chemicals | Busan Ind vs. Kukdo Chemical Co | Busan Ind vs. Lotte Fine Chemical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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