Correlation Between Daiyang Metal and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Hansol 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 Daiyang Metal and Hansol Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and Hansol Chemical Co, you can compare the effects of market volatilities on Daiyang Metal and Hansol 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 Daiyang Metal with a short position of Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Hansol Chemical.
Diversification Opportunities for Daiyang Metal and Hansol Chemical
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daiyang and Hansol is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Hansol Chemical go up and down completely randomly.
Pair Corralation between Daiyang Metal and Hansol Chemical
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 1.23 times more return on investment than Hansol Chemical. However, Daiyang Metal is 1.23 times more volatile than Hansol Chemical Co. It trades about -0.04 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.33 per unit of risk. If you would invest 153,900 in Daiyang Metal Co on November 7, 2024 and sell it today you would lose (3,400) from holding Daiyang Metal Co or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Daiyang Metal Co vs. Hansol Chemical Co
Performance |
| Timeline |
| Daiyang Metal |
| Hansol Chemical |
Daiyang Metal and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Hansol Chemical
The main advantage of trading using opposite Daiyang Metal and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Hansol 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 Hansol Chemical will offset losses from the drop in Hansol Chemical's long position.| Daiyang Metal vs. Samsung Publishing Co | Daiyang Metal vs. FNSTech Co | Daiyang Metal vs. PH Tech Co | Daiyang Metal vs. Spolytech Co |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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