Correlation Between Hannong Chemicals and Nature
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Nature 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 Nature into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Nature and Environment, you can compare the effects of market volatilities on Hannong Chemicals and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Nature.
Diversification Opportunities for Hannong Chemicals and Nature
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannong and Nature is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Nature go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Nature
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 2.07 times more return on investment than Nature. However, Hannong Chemicals is 2.07 times more volatile than Nature and Environment. It trades about 0.01 of its potential returns per unit of risk. Nature and Environment is currently generating about -0.08 per unit of risk. If you would invest 1,694,785 in Hannong Chemicals on September 4, 2024 and sell it today you would lose (253,785) from holding Hannong Chemicals or give up 14.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Nature and Environment
Performance |
| Timeline |
| Hannong Chemicals |
| Nature and Environment |
Hannong Chemicals and Nature Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Nature
The main advantage of trading using opposite Hannong Chemicals and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature's long position.| Hannong Chemicals vs. Korea Petro Chemical | Hannong Chemicals vs. LAKE MATERIALS LTD | Hannong Chemicals vs. Iljin Materials Co | Hannong Chemicals vs. TOPMATERIAL LTD |
| Nature vs. Kyung In Synthetic Corp | Nature vs. Pureun Mutual Savings | Nature vs. GS Retail Co | Nature vs. Hannong Chemicals |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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