Correlation Between Hanwha Solutions and Ecopro
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Ecopro 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 Ecopro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Ecopro Co, you can compare the effects of market volatilities on Hanwha Solutions and Ecopro 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 Ecopro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Ecopro.
Diversification Opportunities for Hanwha Solutions and Ecopro
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanwha and Ecopro is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Ecopro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro 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 Ecopro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Ecopro go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Ecopro
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 0.97 times more return on investment than Ecopro. However, Hanwha Solutions is 1.03 times less risky than Ecopro. It trades about -0.06 of its potential returns per unit of risk. Ecopro Co is currently generating about -0.06 per unit of risk. If you would invest 3,244,486 in Hanwha Solutions on August 24, 2024 and sell it today you would lose (1,561,486) from holding Hanwha Solutions or give up 48.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.44% |
| Values | Daily Returns |
Hanwha Solutions vs. Ecopro Co
Performance |
| Timeline |
| Hanwha Solutions |
| Ecopro |
Hanwha Solutions and Ecopro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and Ecopro
The main advantage of trading using opposite Hanwha Solutions and Ecopro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Ecopro 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 Ecopro will offset losses from the drop in Ecopro's long position.| Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. POSCO Holdings | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel |
| Ecopro vs. LG Chemicals | Ecopro vs. POSCO Holdings | Ecopro vs. Lotte Chemical Corp | Ecopro 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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