Correlation Between Hanwha Chemical and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and ABCO Electronics 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 ABCO Electronics 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 ABCO Electronics Co, you can compare the effects of market volatilities on Hanwha Chemical and ABCO Electronics 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 ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and ABCO Electronics.
Diversification Opportunities for Hanwha Chemical and ABCO Electronics
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and ABCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics 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 ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and ABCO Electronics go up and down completely randomly.
Pair Corralation between Hanwha Chemical and ABCO Electronics
Assuming the 90 days trading horizon Hanwha Chemical is expected to generate 1.77 times less return on investment than ABCO Electronics. In addition to that, Hanwha Chemical is 1.69 times more volatile than ABCO Electronics Co. It trades about 0.14 of its total potential returns per unit of risk. ABCO Electronics Co is currently generating about 0.43 per unit of volatility. If you would invest 496,000 in ABCO Electronics Co on November 6, 2024 and sell it today you would earn a total of 107,000 from holding ABCO Electronics Co or generate 21.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Chemical Corp vs. ABCO Electronics Co
Performance |
| Timeline |
| Hanwha Chemical Corp |
| ABCO Electronics |
Hanwha Chemical and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and ABCO Electronics
The main advantage of trading using opposite Hanwha Chemical and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' 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 |
| ABCO Electronics vs. Lee Ku Industrial | ABCO Electronics vs. Seoul Food Industrial | ABCO Electronics vs. Kumho Industrial Co | ABCO Electronics vs. iNtRON Biotechnology |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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