Correlation Between Hannong Chemicals and LEADCORP
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and LEADCORP 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 LEADCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and The LEADCORP, you can compare the effects of market volatilities on Hannong Chemicals and LEADCORP 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 LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and LEADCORP.
Diversification Opportunities for Hannong Chemicals and LEADCORP
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hannong and LEADCORP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP 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 LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and LEADCORP go up and down completely randomly.
Pair Corralation between Hannong Chemicals and LEADCORP
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 3.55 times more return on investment than LEADCORP. However, Hannong Chemicals is 3.55 times more volatile than The LEADCORP. It trades about 0.04 of its potential returns per unit of risk. The LEADCORP is currently generating about -0.06 per unit of risk. If you would invest 1,049,702 in Hannong Chemicals on September 14, 2024 and sell it today you would earn a total of 358,298 from holding Hannong Chemicals or generate 34.13% 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. The LEADCORP
Performance |
| Timeline |
| Hannong Chemicals |
| LEADCORP |
Hannong Chemicals and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and LEADCORP
The main advantage of trading using opposite Hannong Chemicals and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP'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 |
| LEADCORP vs. LG Chemicals | LEADCORP vs. Hannong Chemicals | LEADCORP vs. Seoul Food Industrial | LEADCORP vs. Pyung Hwa Industrial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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