Correlation Between Hanwha Chemical and Kyeryong Construction
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and Kyeryong 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 Kyeryong 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 Kyeryong Construction Industrial, you can compare the effects of market volatilities on Hanwha Chemical and Kyeryong 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 Kyeryong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and Kyeryong Construction.
Diversification Opportunities for Hanwha Chemical and Kyeryong Construction
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanwha and Kyeryong is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and Kyeryong Construction Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyeryong 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 Kyeryong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyeryong Construction has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and Kyeryong Construction go up and down completely randomly.
Pair Corralation between Hanwha Chemical and Kyeryong Construction
Assuming the 90 days trading horizon Hanwha Chemical Corp is expected to generate 5.01 times more return on investment than Kyeryong Construction. However, Hanwha Chemical is 5.01 times more volatile than Kyeryong Construction Industrial. It trades about 0.26 of its potential returns per unit of risk. Kyeryong Construction Industrial is currently generating about -0.16 per unit of risk. If you would invest 1,612,000 in Hanwha Chemical Corp on October 29, 2024 and sell it today you would earn a total of 398,000 from holding Hanwha Chemical Corp or generate 24.69% 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. Kyeryong Construction Industri
Performance |
| Timeline |
| Hanwha Chemical Corp |
| Kyeryong Construction |
Hanwha Chemical and Kyeryong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and Kyeryong Construction
The main advantage of trading using opposite Hanwha Chemical and Kyeryong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, Kyeryong 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 Kyeryong Construction will offset losses from the drop in Kyeryong Construction's long position.| Hanwha Chemical vs. Hotel Shilla Co | Hanwha Chemical vs. Chorokbaem Healthcare Co | Hanwha Chemical vs. Ssangyong Information Communication | Hanwha Chemical vs. Samsung Publishing Co |
| Kyeryong Construction vs. LB Investment | Kyeryong Construction vs. Koryo Credit Information | Kyeryong Construction vs. DataSolution | Kyeryong Construction vs. Korea Information Engineering |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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