Correlation Between Hannong Chemicals and Dreamus
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Dreamus 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 Dreamus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Dreamus Company, you can compare the effects of market volatilities on Hannong Chemicals and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Dreamus.
Diversification Opportunities for Hannong Chemicals and Dreamus
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hannong and Dreamus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Dreamus go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Dreamus
Assuming the 90 days trading horizon Hannong Chemicals is expected to under-perform the Dreamus. In addition to that, Hannong Chemicals is 1.22 times more volatile than Dreamus Company. It trades about -0.08 of its total potential returns per unit of risk. Dreamus Company is currently generating about 0.05 per unit of volatility. If you would invest 174,000 in Dreamus Company on November 6, 2024 and sell it today you would earn a total of 2,500 from holding Dreamus Company or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Dreamus Company
Performance |
| Timeline |
| Hannong Chemicals |
| Dreamus Company |
Hannong Chemicals and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Dreamus
The main advantage of trading using opposite Hannong Chemicals and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| Hannong Chemicals vs. RF Materials Co | Hannong Chemicals vs. EV Advanced Material | Hannong Chemicals vs. PH Tech Co | Hannong Chemicals vs. Solus Advanced Materials |
| Dreamus vs. Samsung Electronics Co | Dreamus vs. Samsung Electronics Co | Dreamus vs. Hyundai Motor Co | Dreamus vs. Hyundai Motor |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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