Correlation Between Hanwha Chemical and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both Hanwha Chemical and ECSTELECOM 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 ECSTELECOM 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 ECSTELECOM Co, you can compare the effects of market volatilities on Hanwha Chemical and ECSTELECOM 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 ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Chemical and ECSTELECOM.
Diversification Opportunities for Hanwha Chemical and ECSTELECOM
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanwha and ECSTELECOM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Chemical Corp and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM 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 ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Hanwha Chemical i.e., Hanwha Chemical and ECSTELECOM go up and down completely randomly.
Pair Corralation between Hanwha Chemical and ECSTELECOM
Assuming the 90 days trading horizon Hanwha Chemical Corp is expected to generate 3.07 times more return on investment than ECSTELECOM. However, Hanwha Chemical is 3.07 times more volatile than ECSTELECOM Co. It trades about 0.15 of its potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.23 per unit of risk. If you would invest 1,794,000 in Hanwha Chemical Corp on November 7, 2024 and sell it today you would earn a total of 206,000 from holding Hanwha Chemical Corp or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Chemical Corp vs. ECSTELECOM Co
Performance |
| Timeline |
| Hanwha Chemical Corp |
| ECSTELECOM |
Hanwha Chemical and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Chemical and ECSTELECOM
The main advantage of trading using opposite Hanwha Chemical and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Chemical position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM'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 |
| ECSTELECOM vs. Hyundai Engineering Construction | ECSTELECOM vs. Woorim Machinery Co | ECSTELECOM vs. Daewoo Engineering Construction | ECSTELECOM vs. Handok Clean Tech |
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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