Correlation Between Hanwha Chemical and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and Hanshin Construction 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 Hanshin Construction 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 Hanshin Construction Co, you can compare the effects of market volatilities on Hanwha Chemical and Hanshin Construction 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 Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and Hanshin Construction.
Diversification Opportunities for Hanwha Chemical and Hanshin Construction
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanwha and Hanshin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction 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 Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and Hanshin Construction go up and down completely randomly.
Pair Corralation between Hanwha Chemical and Hanshin Construction
Assuming the 90 days trading horizon Hanwha Chemical Corp is expected to generate 5.4 times more return on investment than Hanshin Construction. However, Hanwha Chemical is 5.4 times more volatile than Hanshin Construction Co. It trades about 0.14 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.46 per unit of risk. If you would invest 1,794,000 in Hanwha Chemical Corp on November 6, 2024 and sell it today you would earn a total of 183,000 from holding Hanwha Chemical Corp or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Chemical Corp vs. Hanshin Construction Co
Performance |
| Timeline |
| Hanwha Chemical Corp |
| Hanshin Construction |
Hanwha Chemical and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and Hanshin Construction
The main advantage of trading using opposite Hanwha Chemical and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| Hanwha Chemical vs. Insun Environment New | Hanwha Chemical vs. Youngsin Metal Industrial | Hanwha Chemical vs. Nature and Environment | Hanwha Chemical vs. Daechang Steel Co |
| Hanshin Construction vs. CKH Food Health | Hanshin Construction vs. Woori Technology | Hanshin Construction vs. Foodnamoo | Hanshin Construction vs. NewFlex Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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