Correlation Between Hanwha Solutions and Histeel
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Histeel 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 Histeel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Histeel, you can compare the effects of market volatilities on Hanwha Solutions and Histeel 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 Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Histeel.
Diversification Opportunities for Hanwha Solutions and Histeel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanwha and Histeel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel 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 Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Histeel go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Histeel
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Histeel. But the stock apears to be less risky and, when comparing its historical volatility, Hanwha Solutions is 1.29 times less risky than Histeel. The stock trades about -0.37 of its potential returns per unit of risk. The Histeel is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 312,500 in Histeel on September 1, 2024 and sell it today you would lose (7,500) from holding Histeel or give up 2.4% 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. Histeel
Performance |
| Timeline |
| Hanwha Solutions |
| Histeel |
Hanwha Solutions and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Histeel
The main advantage of trading using opposite Hanwha Solutions and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Hanwha Solutions vs. Lotte Energy Materials | Hanwha Solutions vs. Chorokbaem Healthcare Co | Hanwha Solutions vs. Union Materials Corp | Hanwha Solutions vs. Top Material Co |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Hyundai Steel |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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