Correlation Between Hanwha Solutions and Kg Chemical
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Kg 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 Hanwha Solutions and Kg Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Kg Chemical, you can compare the effects of market volatilities on Hanwha Solutions and Kg 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 Hanwha Solutions with a short position of Kg Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Kg Chemical.
Diversification Opportunities for Hanwha Solutions and Kg Chemical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanwha and 001390 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Kg Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kg Chemical and Hanwha Solutions 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 Hanwha Solutions are associated (or correlated) with Kg Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kg Chemical has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Kg Chemical go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Kg Chemical
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 3.16 times more return on investment than Kg Chemical. However, Hanwha Solutions is 3.16 times more volatile than Kg Chemical. It trades about 0.26 of its potential returns per unit of risk. Kg Chemical is currently generating about 0.21 per unit of risk. If you would invest 1,584,000 in Hanwha Solutions on October 25, 2024 and sell it today you would earn a total of 395,000 from holding Hanwha Solutions or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. Kg Chemical
Performance |
| Timeline |
| Hanwha Solutions |
| Kg Chemical |
Hanwha Solutions and Kg Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Kg Chemical
The main advantage of trading using opposite Hanwha Solutions and Kg Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Kg 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 Kg Chemical will offset losses from the drop in Kg Chemical's long position.| Hanwha Solutions vs. KTB Investment Securities | Hanwha Solutions vs. Samsung Publishing Co | Hanwha Solutions vs. Nice Information Telecommunication | Hanwha Solutions vs. EBEST Investment Securities |
| Kg Chemical vs. Tuksu Engineering ConstructionLtd | Kg Chemical vs. Seoul Electronics Telecom | Kg Chemical vs. Sungdo Engineering Construction | Kg Chemical vs. Chorokbaem Healthcare 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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