Correlation Between Hannong Chemicals and Innodep
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Innodep 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 Innodep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Innodep, you can compare the effects of market volatilities on Hannong Chemicals and Innodep 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 Innodep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Innodep.
Diversification Opportunities for Hannong Chemicals and Innodep
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannong and Innodep is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Innodep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodep 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 Innodep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodep has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Innodep go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Innodep
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 1.36 times more return on investment than Innodep. However, Hannong Chemicals is 1.36 times more volatile than Innodep. It trades about 0.01 of its potential returns per unit of risk. Innodep is currently generating about -0.03 per unit of risk. If you would invest 1,694,785 in Hannong Chemicals on September 5, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Innodep
Performance |
| Timeline |
| Hannong Chemicals |
| Innodep |
Hannong Chemicals and Innodep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Innodep
The main advantage of trading using opposite Hannong Chemicals and Innodep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Innodep 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 Innodep will offset losses from the drop in Innodep's long position.| Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Daewoo SBI SPAC | Hannong Chemicals vs. Dream Security co | Hannong Chemicals vs. Microfriend |
| Innodep vs. Woori Technology Investment | Innodep vs. EBEST Investment Securities | Innodep vs. Iljin Display | Innodep vs. NH Investment Securities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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