Correlation Between Hanwha Solutions and OCI
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and OCI 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 OCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and OCI Co, you can compare the effects of market volatilities on Hanwha Solutions and OCI 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 OCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and OCI.
Diversification Opportunities for Hanwha Solutions and OCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanwha and OCI is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co 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 OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and OCI go up and down completely randomly.
Pair Corralation between Hanwha Solutions and OCI
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the OCI. In addition to that, Hanwha Solutions is 1.38 times more volatile than OCI Co. It trades about -0.38 of its total potential returns per unit of risk. OCI Co is currently generating about -0.27 per unit of volatility. If you would invest 6,900,000 in OCI Co on September 2, 2024 and sell it today you would lose (950,000) from holding OCI Co or give up 13.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. OCI Co
Performance |
| Timeline |
| Hanwha Solutions |
| OCI Co |
Hanwha Solutions and OCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and OCI
The main advantage of trading using opposite Hanwha Solutions and OCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, OCI 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 OCI will offset losses from the drop in OCI's long position.| Hanwha Solutions vs. Lotte Chilsung Beverage | Hanwha Solutions vs. Golden Bridge Investment | Hanwha Solutions vs. Hyosung Advanced Materials | Hanwha Solutions vs. Lake Materials 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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