Correlation Between Hanwha Solutions and ENF Technology
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and ENF Technology 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 ENF Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and ENF Technology Co, you can compare the effects of market volatilities on Hanwha Solutions and ENF Technology 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 ENF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and ENF Technology.
Diversification Opportunities for Hanwha Solutions and ENF Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and ENF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and ENF Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENF Technology 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 ENF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENF Technology has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and ENF Technology go up and down completely randomly.
Pair Corralation between Hanwha Solutions and ENF Technology
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the ENF Technology. In addition to that, Hanwha Solutions is 1.12 times more volatile than ENF Technology Co. It trades about -0.1 of its total potential returns per unit of risk. ENF Technology Co is currently generating about -0.11 per unit of volatility. If you would invest 2,635,000 in ENF Technology Co on September 21, 2024 and sell it today you would lose (899,000) from holding ENF Technology Co or give up 34.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Solutions vs. ENF Technology Co
Performance |
| Timeline |
| Hanwha Solutions |
| ENF Technology |
Hanwha Solutions and ENF Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and ENF Technology
The main advantage of trading using opposite Hanwha Solutions and ENF Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, ENF Technology 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 ENF Technology will offset losses from the drop in ENF Technology's long position.| Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel | Hanwha Solutions vs. Dongkuk Steel Mill |
| ENF Technology vs. Dongjin Semichem Co | ENF Technology vs. SS TECH | ENF Technology vs. Tokai Carbon Korea | ENF Technology vs. Soulbrain Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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