Correlation Between Hanwha Chemical and Korea Aerospace
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and Korea Aerospace 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 Korea Aerospace 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 Korea Aerospace Industries, you can compare the effects of market volatilities on Hanwha Chemical and Korea Aerospace 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 Korea Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and Korea Aerospace.
Diversification Opportunities for Hanwha Chemical and Korea Aerospace
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanwha and Korea is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and Korea Aerospace Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Aerospace Indu 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 Korea Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Aerospace Indu has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and Korea Aerospace go up and down completely randomly.
Pair Corralation between Hanwha Chemical and Korea Aerospace
Assuming the 90 days trading horizon Hanwha Chemical Corp is expected to under-perform the Korea Aerospace. In addition to that, Hanwha Chemical is 1.65 times more volatile than Korea Aerospace Industries. It trades about -0.03 of its total potential returns per unit of risk. Korea Aerospace Industries is currently generating about 0.03 per unit of volatility. If you would invest 4,890,000 in Korea Aerospace Industries on November 3, 2024 and sell it today you would earn a total of 440,000 from holding Korea Aerospace Industries or generate 9.0% 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. Korea Aerospace Industries
Performance |
| Timeline |
| Hanwha Chemical Corp |
| Korea Aerospace Indu |
Hanwha Chemical and Korea Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and Korea Aerospace
The main advantage of trading using opposite Hanwha Chemical and Korea Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, Korea Aerospace 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 Korea Aerospace will offset losses from the drop in Korea Aerospace's long position.| Hanwha Chemical vs. KPX Green Chemical | Hanwha Chemical vs. Lotte Fine Chemical | Hanwha Chemical vs. SH Energy Chemical | Hanwha Chemical vs. Sam Yang Foods |
| Korea Aerospace vs. Lotte Data Communication | Korea Aerospace vs. Daishin Information Communications | Korea Aerospace vs. Ssangyong Information Communication | Korea Aerospace vs. Automobile Pc |
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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