Correlation Between Hanwha Chemical and Samick Musical
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and Samick Musical 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 Chemical and Samick Musical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Chemical Corp and Samick Musical Instruments, you can compare the effects of market volatilities on Hanwha Chemical and Samick Musical 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 Chemical with a short position of Samick Musical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and Samick Musical.
Diversification Opportunities for Hanwha Chemical and Samick Musical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hanwha and Samick is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and Samick Musical Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samick Musical Instr and Hanwha Chemical 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 Chemical Corp are associated (or correlated) with Samick Musical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samick Musical Instr has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and Samick Musical go up and down completely randomly.
Pair Corralation between Hanwha Chemical and Samick Musical
Assuming the 90 days trading horizon Hanwha Chemical is expected to generate 1.39 times less return on investment than Samick Musical. In addition to that, Hanwha Chemical is 1.15 times more volatile than Samick Musical Instruments. It trades about 0.16 of its total potential returns per unit of risk. Samick Musical Instruments is currently generating about 0.25 per unit of volatility. If you would invest 105,926 in Samick Musical Instruments on October 30, 2024 and sell it today you would earn a total of 44,174 from holding Samick Musical Instruments or generate 41.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Chemical Corp vs. Samick Musical Instruments
Performance |
| Timeline |
| Hanwha Chemical Corp |
| Samick Musical Instr |
Hanwha Chemical and Samick Musical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and Samick Musical
The main advantage of trading using opposite Hanwha Chemical and Samick Musical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, Samick Musical 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 Samick Musical will offset losses from the drop in Samick Musical's long position.| Hanwha Chemical vs. Samhyun Steel Co | Hanwha Chemical vs. Korea Steel Co | Hanwha Chemical vs. Fine Besteel Co | Hanwha Chemical vs. LS Materials |
| Samick Musical vs. Digital Power Communications | Samick Musical vs. SH Energy Chemical | Samick Musical vs. Isu Chemical Co | Samick Musical vs. Seoul Electronics Telecom |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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