Correlation Between Hannong Chemicals and Sangsin Energy
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Sangsin Energy 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 Sangsin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Sangsin Energy Display, you can compare the effects of market volatilities on Hannong Chemicals and Sangsin Energy 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 Sangsin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Sangsin Energy.
Diversification Opportunities for Hannong Chemicals and Sangsin Energy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hannong and Sangsin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Sangsin Energy Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsin Energy Display 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 Sangsin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsin Energy Display has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Sangsin Energy go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Sangsin Energy
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 1.86 times more return on investment than Sangsin Energy. However, Hannong Chemicals is 1.86 times more volatile than Sangsin Energy Display. It trades about 0.01 of its potential returns per unit of risk. Sangsin Energy Display is currently generating about -0.12 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Sangsin Energy Display
Performance |
| Timeline |
| Hannong Chemicals |
| Sangsin Energy Display |
Hannong Chemicals and Sangsin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Sangsin Energy
The main advantage of trading using opposite Hannong Chemicals and Sangsin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Sangsin Energy 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 Sangsin Energy will offset losses from the drop in Sangsin Energy'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 |
| Sangsin Energy vs. InfoBank | Sangsin Energy vs. Ssangyong Information Communication | Sangsin Energy vs. Daou Data Corp | Sangsin Energy vs. KB Financial Group |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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