Correlation Between Hanwha Solutions and Keum Kang
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Keum Kang 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 Keum Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Keum Kang Steel, you can compare the effects of market volatilities on Hanwha Solutions and Keum Kang 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 Keum Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Keum Kang.
Diversification Opportunities for Hanwha Solutions and Keum Kang
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanwha and Keum is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Keum Kang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keum Kang 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 Keum Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keum Kang Steel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Keum Kang go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Keum Kang
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Keum Kang. But the stock apears to be less risky and, when comparing its historical volatility, Hanwha Solutions is 1.05 times less risky than Keum Kang. The stock trades about -0.29 of its potential returns per unit of risk. The Keum Kang Steel is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 471,000 in Keum Kang Steel on August 28, 2024 and sell it today you would lose (41,500) from holding Keum Kang Steel or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. Keum Kang Steel
Performance |
| Timeline |
| Hanwha Solutions |
| Keum Kang Steel |
Hanwha Solutions and Keum Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Keum Kang
The main advantage of trading using opposite Hanwha Solutions and Keum Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Keum Kang 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 Keum Kang will offset losses from the drop in Keum Kang's long position.| Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel | Hanwha Solutions vs. Seah Steel Corp |
| Keum Kang vs. LG Chemicals | Keum Kang vs. Lotte Chemical Corp | Keum Kang vs. Hyundai Steel | Keum Kang vs. Seah Steel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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