Correlation Between Hannong Chemicals and SGC Energy
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and SGC Energy 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 SGC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and SGC Energy Co, you can compare the effects of market volatilities on Hannong Chemicals and SGC Energy 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 SGC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and SGC Energy.
Diversification Opportunities for Hannong Chemicals and SGC Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hannong and SGC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and SGC Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGC Energy 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 SGC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGC Energy has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and SGC Energy go up and down completely randomly.
Pair Corralation between Hannong Chemicals and SGC Energy
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 2.9 times more return on investment than SGC Energy. However, Hannong Chemicals is 2.9 times more volatile than SGC Energy Co. It trades about 0.03 of its potential returns per unit of risk. SGC Energy Co is currently generating about -0.01 per unit of risk. If you would invest 1,054,607 in Hannong Chemicals on September 12, 2024 and sell it today you would earn a total of 280,393 from holding Hannong Chemicals or generate 26.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hannong Chemicals vs. SGC Energy Co
Performance |
| Timeline |
| Hannong Chemicals |
| SGC Energy |
Hannong Chemicals and SGC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and SGC Energy
The main advantage of trading using opposite Hannong Chemicals and SGC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, SGC Energy 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 SGC Energy will offset losses from the drop in SGC Energy's long position.| Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. SK Hynix | Hannong Chemicals vs. POSCO Holdings |
| SGC Energy vs. Hannong Chemicals | SGC Energy vs. EBEST Investment Securities | SGC Energy vs. E Investment Development | SGC Energy vs. Daehan Synthetic Fiber |
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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