Correlation Between Hanwha Solutions and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and SK Chemicals 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 SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and SK Chemicals Co, you can compare the effects of market volatilities on Hanwha Solutions and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and SK Chemicals.
Diversification Opportunities for Hanwha Solutions and SK Chemicals
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and 285130 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and SK Chemicals go up and down completely randomly.
Pair Corralation between Hanwha Solutions and SK Chemicals
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the SK Chemicals. In addition to that, Hanwha Solutions is 1.59 times more volatile than SK Chemicals Co. It trades about -0.29 of its total potential returns per unit of risk. SK Chemicals Co is currently generating about -0.33 per unit of volatility. If you would invest 4,925,000 in SK Chemicals Co on August 29, 2024 and sell it today you would lose (665,000) from holding SK Chemicals Co or give up 13.5% 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. SK Chemicals Co
Performance |
| Timeline |
| Hanwha Solutions |
| SK Chemicals |
Hanwha Solutions and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Solutions and SK Chemicals
The main advantage of trading using opposite Hanwha Solutions and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Hanwha Solutions vs. Cuckoo Homesys Co | Hanwha Solutions vs. KT Submarine Telecom | Hanwha Solutions vs. Sempio Foods Co | Hanwha Solutions vs. Kisan Telecom Co |
| SK Chemicals vs. Woori Technology Investment | SK Chemicals vs. Dongbu Insurance Co | SK Chemicals vs. Korea Computer | SK Chemicals vs. E Investment Development |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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