Correlation Between Hanwha Aerospace and FNSTech
Can any of the company-specific risk be diversified away by investing in both Hanwha Aerospace and FNSTech 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 Hanwha Aerospace and FNSTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Aerospace Co and FNSTech Co, you can compare the effects of market volatilities on Hanwha Aerospace and FNSTech 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 Hanwha Aerospace with a short position of FNSTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Aerospace and FNSTech.
Diversification Opportunities for Hanwha Aerospace and FNSTech
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanwha and FNSTech is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Aerospace Co and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech and Hanwha Aerospace 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 Hanwha Aerospace Co are associated (or correlated) with FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Hanwha Aerospace i.e., Hanwha Aerospace and FNSTech go up and down completely randomly.
Pair Corralation between Hanwha Aerospace and FNSTech
Assuming the 90 days trading horizon Hanwha Aerospace Co is expected to under-perform the FNSTech. In addition to that, Hanwha Aerospace is 1.02 times more volatile than FNSTech Co. It trades about -0.19 of its total potential returns per unit of risk. FNSTech Co is currently generating about -0.07 per unit of volatility. If you would invest 941,000 in FNSTech Co on September 2, 2024 and sell it today you would lose (73,000) from holding FNSTech Co or give up 7.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Aerospace Co vs. FNSTech Co
Performance |
| Timeline |
| Hanwha Aerospace |
| FNSTech |
Hanwha Aerospace and FNSTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Aerospace and FNSTech
The main advantage of trading using opposite Hanwha Aerospace and FNSTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Aerospace position performs unexpectedly, FNSTech 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 FNSTech will offset losses from the drop in FNSTech's long position.| Hanwha Aerospace vs. Korea New Network | Hanwha Aerospace vs. ICD Co | Hanwha Aerospace vs. DYPNF CoLtd | Hanwha Aerospace vs. Busan Industrial Co |
| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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