Correlation Between Hanwha Solutions and Husteel
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Husteel 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 Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Husteel, you can compare the effects of market volatilities on Hanwha Solutions and Husteel 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 Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Husteel.
Diversification Opportunities for Hanwha Solutions and Husteel
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanwha and Husteel is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel 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 Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Husteel go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Husteel
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 1.75 times more return on investment than Husteel. However, Hanwha Solutions is 1.75 times more volatile than Husteel. It trades about 0.29 of its potential returns per unit of risk. Husteel is currently generating about 0.39 per unit of risk. If you would invest 1,545,000 in Hanwha Solutions on October 28, 2024 and sell it today you would earn a total of 465,000 from holding Hanwha Solutions or generate 30.1% 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. Husteel
Performance |
| Timeline |
| Hanwha Solutions |
| Husteel |
Hanwha Solutions and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Husteel
The main advantage of trading using opposite Hanwha Solutions and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.| Hanwha Solutions vs. ChipsMedia | Hanwha Solutions vs. Mgame Corp | Hanwha Solutions vs. Spolytech Co | Hanwha Solutions vs. PH Tech Co |
| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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