Correlation Between OCI and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both OCI and Hanwha Solutions 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 OCI and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OCI Co and Hanwha Solutions, you can compare the effects of market volatilities on OCI and Hanwha Solutions 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 OCI with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of OCI and Hanwha Solutions.
Diversification Opportunities for OCI and Hanwha Solutions
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OCI and Hanwha is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding OCI Co and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and OCI 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 OCI Co are associated (or correlated) with Hanwha Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Solutions has no effect on the direction of OCI i.e., OCI and Hanwha Solutions go up and down completely randomly.
Pair Corralation between OCI and Hanwha Solutions
Assuming the 90 days trading horizon OCI Co is expected to generate 1.38 times more return on investment than Hanwha Solutions. However, OCI is 1.38 times more volatile than Hanwha Solutions. It trades about 0.01 of its potential returns per unit of risk. Hanwha Solutions is currently generating about -0.06 per unit of risk. If you would invest 7,972,089 in OCI Co on September 2, 2024 and sell it today you would lose (2,022,089) from holding OCI Co or give up 25.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OCI Co vs. Hanwha Solutions
Performance |
| Timeline |
| OCI Co |
| Hanwha Solutions |
OCI and Hanwha Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OCI and Hanwha Solutions
The main advantage of trading using opposite OCI and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OCI position performs unexpectedly, Hanwha Solutions 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 Hanwha Solutions will offset losses from the drop in Hanwha Solutions' long position.The idea behind OCI Co and Hanwha Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hanwha Solutions vs. Lotte Chilsung Beverage | Hanwha Solutions vs. Golden Bridge Investment | Hanwha Solutions vs. Hyosung Advanced Materials | Hanwha Solutions vs. Lake Materials 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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