Correlation Between Hanwha Solutions and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and KPX Chemical 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 KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and KPX Chemical, you can compare the effects of market volatilities on Hanwha Solutions and KPX Chemical 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 KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and KPX Chemical.
Diversification Opportunities for Hanwha Solutions and KPX Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanwha and KPX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical 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 KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and KPX Chemical go up and down completely randomly.
Pair Corralation between Hanwha Solutions and KPX Chemical
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the KPX Chemical. In addition to that, Hanwha Solutions is 3.92 times more volatile than KPX Chemical. It trades about -0.06 of its total potential returns per unit of risk. KPX Chemical is currently generating about 0.0 per unit of volatility. If you would invest 4,477,313 in KPX Chemical on September 4, 2024 and sell it today you would earn a total of 12,687 from holding KPX Chemical or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. KPX Chemical
Performance |
| Timeline |
| Hanwha Solutions |
| KPX Chemical |
Hanwha Solutions and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and KPX Chemical
The main advantage of trading using opposite Hanwha Solutions and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, KPX Chemical 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. POSCO Holdings | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel |
| KPX Chemical vs. Shinsung Delta Tech | KPX Chemical vs. SS TECH | KPX Chemical vs. Vitzro Tech Co | KPX Chemical vs. Woori Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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