Correlation Between Hanwha Solutions and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Moonbae Steel 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 Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Moonbae Steel, you can compare the effects of market volatilities on Hanwha Solutions and Moonbae Steel 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 Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Moonbae Steel.
Diversification Opportunities for Hanwha Solutions and Moonbae Steel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanwha and Moonbae is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Moonbae Steel go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Moonbae Steel
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Moonbae Steel. In addition to that, Hanwha Solutions is 1.15 times more volatile than Moonbae Steel. It trades about -0.37 of its total potential returns per unit of risk. Moonbae Steel is currently generating about 0.14 per unit of volatility. If you would invest 234,500 in Moonbae Steel on September 1, 2024 and sell it today you would earn a total of 20,000 from holding Moonbae Steel or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hanwha Solutions vs. Moonbae Steel
Performance |
| Timeline |
| Hanwha Solutions |
| Moonbae Steel |
Hanwha Solutions and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Moonbae Steel
The main advantage of trading using opposite Hanwha Solutions and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Moonbae Steel 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.| Hanwha Solutions vs. Lotte Energy Materials | Hanwha Solutions vs. Chorokbaem Healthcare Co | Hanwha Solutions vs. Union Materials Corp | Hanwha Solutions vs. Top Material Co |
| Moonbae Steel vs. Automobile Pc | Moonbae Steel vs. Asiana Airlines | Moonbae Steel vs. Youl Chon Chemical | Moonbae Steel vs. Dongnam Chemical 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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