Correlation Between Hannong Chemicals and Daeduck Electronics
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Daeduck Electronics 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 Daeduck Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Daeduck Electronics Co, you can compare the effects of market volatilities on Hannong Chemicals and Daeduck Electronics 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 Daeduck Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Daeduck Electronics.
Diversification Opportunities for Hannong Chemicals and Daeduck Electronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannong and Daeduck is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics 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 Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Daeduck Electronics go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Daeduck Electronics
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 5.88 times more return on investment than Daeduck Electronics. However, Hannong Chemicals is 5.88 times more volatile than Daeduck Electronics Co. It trades about 0.37 of its potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.2 per unit of risk. If you would invest 1,369,000 in Hannong Chemicals on December 1, 2024 and sell it today you would earn a total of 578,000 from holding Hannong Chemicals or generate 42.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Daeduck Electronics Co
Performance |
| Timeline |
| Hannong Chemicals |
| Daeduck Electronics |
Hannong Chemicals and Daeduck Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Daeduck Electronics
The main advantage of trading using opposite Hannong Chemicals and Daeduck Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Daeduck Electronics 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 Daeduck Electronics will offset losses from the drop in Daeduck Electronics' long position.| Hannong Chemicals vs. Kyeryong Construction Industrial | Hannong Chemicals vs. Busan Industrial Co | Hannong Chemicals vs. LEENO Industrial | Hannong Chemicals vs. National Plastic Co |
| Daeduck Electronics vs. Nam Hwa Construction | Daeduck Electronics vs. Tuksu Engineering ConstructionLtd | Daeduck Electronics vs. Ssangyong Information Communication | Daeduck Electronics vs. Dongwoo Farm To |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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