Correlation Between Hanwha Solutions and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Dongbu 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 Dongbu 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 Dongbu Steel Co, you can compare the effects of market volatilities on Hanwha Solutions and Dongbu 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 Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Dongbu Steel.
Diversification Opportunities for Hanwha Solutions and Dongbu Steel
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanwha and Dongbu is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu 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 Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Dongbu Steel go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Dongbu Steel
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Dongbu Steel. In addition to that, Hanwha Solutions is 1.48 times more volatile than Dongbu Steel Co. It trades about -0.18 of its total potential returns per unit of risk. Dongbu Steel Co is currently generating about 0.13 per unit of volatility. If you would invest 568,000 in Dongbu Steel Co on August 29, 2024 and sell it today you would earn a total of 91,000 from holding Dongbu Steel Co or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. Dongbu Steel Co
Performance |
| Timeline |
| Hanwha Solutions |
| Dongbu Steel |
Hanwha Solutions and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Dongbu Steel
The main advantage of trading using opposite Hanwha Solutions and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Dongbu 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| Hanwha Solutions vs. Cuckoo Homesys Co | Hanwha Solutions vs. KT Submarine Telecom | Hanwha Solutions vs. Sempio Foods Co | Hanwha Solutions vs. Kisan Telecom Co |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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