Correlation Between Hanwha Solutions and Korea Zinc
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Korea Zinc 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 Korea Zinc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Korea Zinc, you can compare the effects of market volatilities on Hanwha Solutions and Korea Zinc 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 Korea Zinc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Korea Zinc.
Diversification Opportunities for Hanwha Solutions and Korea Zinc
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanwha and Korea is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Korea Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Zinc 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 Korea Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Zinc has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Korea Zinc go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Korea Zinc
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 1.39 times more return on investment than Korea Zinc. However, Hanwha Solutions is 1.39 times more volatile than Korea Zinc. It trades about 0.1 of its potential returns per unit of risk. Korea Zinc is currently generating about -0.01 per unit of risk. If you would invest 1,977,000 in Hanwha Solutions on November 27, 2024 and sell it today you would earn a total of 88,000 from holding Hanwha Solutions or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. Korea Zinc
Performance |
| Timeline |
| Hanwha Solutions |
| Korea Zinc |
Hanwha Solutions and Korea Zinc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Korea Zinc
The main advantage of trading using opposite Hanwha Solutions and Korea Zinc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Korea Zinc 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 Korea Zinc will offset losses from the drop in Korea Zinc's long position.| Hanwha Solutions vs. Orbitech Co | Hanwha Solutions vs. Inzi Display CoLtd | Hanwha Solutions vs. RFTech Co | Hanwha Solutions vs. LG Display Co |
| Korea Zinc vs. Fine Besteel Co | Korea Zinc vs. Husteel | Korea Zinc vs. Hyundai BNG Steel | Korea Zinc vs. GS Retail 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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