Correlation Between Hannong Chemicals and POSCO M
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and POSCO M 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 POSCO M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and POSCO M TECH Co, you can compare the effects of market volatilities on Hannong Chemicals and POSCO M 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 POSCO M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and POSCO M.
Diversification Opportunities for Hannong Chemicals and POSCO M
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hannong and POSCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and POSCO M TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO M TECH 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 POSCO M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO M TECH has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and POSCO M go up and down completely randomly.
Pair Corralation between Hannong Chemicals and POSCO M
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 1.3 times more return on investment than POSCO M. However, Hannong Chemicals is 1.3 times more volatile than POSCO M TECH Co. It trades about 0.05 of its potential returns per unit of risk. POSCO M TECH Co is currently generating about -0.03 per unit of risk. If you would invest 1,064,698 in Hannong Chemicals on August 25, 2024 and sell it today you would earn a total of 425,302 from holding Hannong Chemicals or generate 39.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. POSCO M TECH Co
Performance |
| Timeline |
| Hannong Chemicals |
| POSCO M TECH |
Hannong Chemicals and POSCO M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and POSCO M
The main advantage of trading using opposite Hannong Chemicals and POSCO M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, POSCO M 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 POSCO M will offset losses from the drop in POSCO M's long position.| Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Daewoo SBI SPAC | Hannong Chemicals vs. Dream Security co | Hannong Chemicals vs. Microfriend |
| POSCO M vs. LG Chemicals | POSCO M vs. POSCO Holdings | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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