Correlation Between Ssangyong Information and Hanwha InvestmentSecuri
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Hanwha InvestmentSecuri 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 Ssangyong Information and Hanwha InvestmentSecuri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and Hanwha InvestmentSecurities Co, you can compare the effects of market volatilities on Ssangyong Information and Hanwha InvestmentSecuri 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 Ssangyong Information with a short position of Hanwha InvestmentSecuri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Hanwha InvestmentSecuri.
Diversification Opportunities for Ssangyong Information and Hanwha InvestmentSecuri
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ssangyong and Hanwha is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Hanwha InvestmentSecuri go up and down completely randomly.
Pair Corralation between Ssangyong Information and Hanwha InvestmentSecuri
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the Hanwha InvestmentSecuri. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 2.8 times less risky than Hanwha InvestmentSecuri. The stock trades about -0.02 of its potential returns per unit of risk. The Hanwha InvestmentSecurities Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 508,000 in Hanwha InvestmentSecurities Co on September 28, 2024 and sell it today you would earn a total of 202,000 from holding Hanwha InvestmentSecurities Co or generate 39.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. Hanwha InvestmentSecurities Co
Performance |
| Timeline |
| Ssangyong Information |
| Hanwha InvestmentSecuri |
Ssangyong Information and Hanwha InvestmentSecuri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and Hanwha InvestmentSecuri
The main advantage of trading using opposite Ssangyong Information and Hanwha InvestmentSecuri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information position performs unexpectedly, Hanwha InvestmentSecuri 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 InvestmentSecuri will offset losses from the drop in Hanwha InvestmentSecuri's long position.The idea behind Ssangyong Information Communication and Hanwha InvestmentSecurities Co 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.
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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