Correlation Between Hannong Chemicals and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Hana Financial 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 Hana Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Hana Financial, you can compare the effects of market volatilities on Hannong Chemicals and Hana Financial 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 Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Hana Financial.
Diversification Opportunities for Hannong Chemicals and Hana Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hannong and Hana is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 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 Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Hana Financial go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Hana Financial
Assuming the 90 days trading horizon Hannong Chemicals is expected to under-perform the Hana Financial. In addition to that, Hannong Chemicals is 3.1 times more volatile than Hana Financial. It trades about -0.08 of its total potential returns per unit of risk. Hana Financial is currently generating about 0.31 per unit of volatility. If you would invest 5,780,000 in Hana Financial on November 6, 2024 and sell it today you would earn a total of 270,000 from holding Hana Financial or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Hana Financial
Performance |
| Timeline |
| Hannong Chemicals |
| Hana Financial |
Hannong Chemicals and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Hana Financial
The main advantage of trading using opposite Hannong Chemicals and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's 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 |
| Hana Financial vs. Sangsin Energy Display | Hana Financial vs. Kukdong Oil Chemicals | Hana Financial vs. Hanwha Chemical Corp | Hana Financial vs. Echomarketing CoLtd |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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