Correlation Between Hannong Chemicals and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Hana Materials 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 Materials 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 Materials, you can compare the effects of market volatilities on Hannong Chemicals and Hana Materials 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 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Hana Materials.
Diversification Opportunities for Hannong Chemicals and Hana Materials
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hannong and Hana is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Hana Materials go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Hana Materials
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 2.99 times less return on investment than Hana Materials. But when comparing it to its historical volatility, Hannong Chemicals is 1.37 times less risky than Hana Materials. It trades about 0.06 of its potential returns per unit of risk. Hana Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,385,000 in Hana Materials on October 16, 2024 and sell it today you would earn a total of 220,000 from holding Hana Materials or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Hana Materials
Performance |
| Timeline |
| Hannong Chemicals |
| Hana Materials |
Hannong Chemicals and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Hana Materials
The main advantage of trading using opposite Hannong Chemicals and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Hana Materials 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 Materials will offset losses from the drop in Hana Materials' long position.| Hannong Chemicals vs. Tamul Multimedia Co | Hannong Chemicals vs. LG Household Healthcare | Hannong Chemicals vs. Iljin Display | Hannong Chemicals vs. SAMG Entertainment Co |
| Hana Materials vs. ABOV Semiconductor Co | Hana Materials vs. Hannong Chemicals | Hana Materials vs. Daejung Chemicals Metals | Hana Materials vs. Sam Yang Foods |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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