Correlation Between Hannong Chemicals and Lee Ku
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Lee Ku 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 Lee Ku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Lee Ku Industrial, you can compare the effects of market volatilities on Hannong Chemicals and Lee Ku 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 Lee Ku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Lee Ku.
Diversification Opportunities for Hannong Chemicals and Lee Ku
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannong and Lee is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Lee Ku Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Ku Industrial 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 Lee Ku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Ku Industrial has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Lee Ku go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Lee Ku
Assuming the 90 days trading horizon Hannong Chemicals is expected to under-perform the Lee Ku. In addition to that, Hannong Chemicals is 1.32 times more volatile than Lee Ku Industrial. It trades about -0.11 of its total potential returns per unit of risk. Lee Ku Industrial is currently generating about 0.04 per unit of volatility. If you would invest 415,000 in Lee Ku Industrial on November 9, 2024 and sell it today you would earn a total of 5,500 from holding Lee Ku Industrial or generate 1.33% 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. Lee Ku Industrial
Performance |
| Timeline |
| Hannong Chemicals |
| Lee Ku Industrial |
Hannong Chemicals and Lee Ku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Lee Ku
The main advantage of trading using opposite Hannong Chemicals and Lee Ku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Lee Ku 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 Lee Ku will offset losses from the drop in Lee Ku's long position.| Hannong Chemicals vs. LG Display Co | Hannong Chemicals vs. Sangsin Energy Display | Hannong Chemicals vs. Handok Clean Tech | Hannong Chemicals vs. SK Chemicals Co |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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