Correlation Between Hanwha Solutions and Soulbrain Holdings
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Soulbrain Holdings 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 Soulbrain Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Soulbrain Holdings Co, you can compare the effects of market volatilities on Hanwha Solutions and Soulbrain Holdings 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 Soulbrain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Soulbrain Holdings.
Diversification Opportunities for Hanwha Solutions and Soulbrain Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanwha and Soulbrain is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Soulbrain Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soulbrain Holdings 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 Soulbrain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soulbrain Holdings has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Soulbrain Holdings go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Soulbrain Holdings
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 1.7 times more return on investment than Soulbrain Holdings. However, Hanwha Solutions is 1.7 times more volatile than Soulbrain Holdings Co. It trades about 0.22 of its potential returns per unit of risk. Soulbrain Holdings Co is currently generating about -0.08 per unit of risk. If you would invest 1,596,000 in Hanwha Solutions on October 26, 2024 and sell it today you would earn a total of 329,000 from holding Hanwha Solutions or generate 20.61% 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. Soulbrain Holdings Co
Performance |
| Timeline |
| Hanwha Solutions |
| Soulbrain Holdings |
Hanwha Solutions and Soulbrain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Soulbrain Holdings
The main advantage of trading using opposite Hanwha Solutions and Soulbrain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Soulbrain Holdings 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 Soulbrain Holdings will offset losses from the drop in Soulbrain Holdings' long position.| Hanwha Solutions vs. SK Chemicals Co | Hanwha Solutions vs. Dongnam Chemical Co | Hanwha Solutions vs. Formetal Co | Hanwha Solutions vs. Daewon Chemical Co |
| Soulbrain Holdings vs. SFA Engineering | Soulbrain Holdings vs. Seoul Semiconductor Co | Soulbrain Holdings vs. Wonik Ips 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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