Correlation Between HMM and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both HMM and SK Chemicals 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 HMM and SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and SK Chemicals Co, you can compare the effects of market volatilities on HMM and SK Chemicals 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 HMM with a short position of SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and SK Chemicals.
Diversification Opportunities for HMM and SK Chemicals
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HMM and 28513K is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals and HMM 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 HMM Co are associated (or correlated) with SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of HMM i.e., HMM and SK Chemicals go up and down completely randomly.
Pair Corralation between HMM and SK Chemicals
Assuming the 90 days trading horizon HMM Co is expected to generate 3.2 times more return on investment than SK Chemicals. However, HMM is 3.2 times more volatile than SK Chemicals Co. It trades about 0.14 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.26 per unit of risk. If you would invest 1,770,000 in HMM Co on November 3, 2024 and sell it today you would earn a total of 134,000 from holding HMM Co or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. SK Chemicals Co
Performance |
| Timeline |
| HMM Co |
| SK Chemicals |
HMM and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and SK Chemicals
The main advantage of trading using opposite HMM and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.The idea behind HMM Co and SK Chemicals 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.| SK Chemicals vs. Mobile Appliance | SK Chemicals vs. Dongkuk Structures Construction | SK Chemicals vs. Kyeryong Construction Industrial | SK Chemicals vs. Lotte Data Communication |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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