Correlation Between Hannong Chemicals and Husteel
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Husteel 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 Hannong Chemicals and Husteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Husteel, you can compare the effects of market volatilities on Hannong Chemicals and Husteel 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 Hannong Chemicals with a short position of Husteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Husteel.
Diversification Opportunities for Hannong Chemicals and Husteel
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hannong and Husteel is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Husteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husteel and Hannong Chemicals 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 Hannong Chemicals are associated (or correlated) with Husteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husteel has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Husteel go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Husteel
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 2.27 times more return on investment than Husteel. However, Hannong Chemicals is 2.27 times more volatile than Husteel. It trades about 0.04 of its potential returns per unit of risk. Husteel is currently generating about 0.04 per unit of risk. If you would invest 1,222,875 in Hannong Chemicals on November 7, 2024 and sell it today you would earn a total of 120,125 from holding Hannong Chemicals or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Husteel
Performance |
| Timeline |
| Hannong Chemicals |
| Husteel |
Hannong Chemicals and Husteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Husteel
The main advantage of trading using opposite Hannong Chemicals and Husteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Husteel 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 Husteel will offset losses from the drop in Husteel's long position.| Hannong Chemicals vs. RF Materials Co | Hannong Chemicals vs. EV Advanced Material | Hannong Chemicals vs. PH Tech Co | Hannong Chemicals vs. Solus Advanced Materials |
| Husteel vs. Eagon Industrial Co | Husteel vs. Daishin Information Communications | Husteel vs. Daesung Industrial Co | Husteel vs. Hyundai Industrial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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