Correlation Between Hannong Chemicals and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and SK Chemicals 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 SK Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and SK Chemicals Co, you can compare the effects of market volatilities on Hannong Chemicals and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and SK Chemicals.
Diversification Opportunities for Hannong Chemicals and SK Chemicals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hannong and 28513K is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and SK Chemicals go up and down completely randomly.
Pair Corralation between Hannong Chemicals and SK Chemicals
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 3.48 times more return on investment than SK Chemicals. However, Hannong Chemicals is 3.48 times more volatile than SK Chemicals Co. It trades about 0.04 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.09 per unit of risk. If you would invest 1,026,992 in Hannong Chemicals on August 31, 2024 and sell it today you would earn a total of 479,008 from holding Hannong Chemicals or generate 46.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. SK Chemicals Co
Performance |
| Timeline |
| Hannong Chemicals |
| SK Chemicals |
Hannong Chemicals and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and SK Chemicals
The main advantage of trading using opposite Hannong Chemicals and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Daewoo SBI SPAC | Hannong Chemicals vs. Dream Security co | Hannong Chemicals vs. Microfriend |
| SK Chemicals vs. Home Center Holdings | SK Chemicals vs. Ssangyong Information Communication | SK Chemicals vs. Mobileleader CoLtd | SK Chemicals vs. Lotte Data Communication |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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