Correlation Between Hanwha Aerospace and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Hanwha Aerospace and Finebesteel 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 Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on Hanwha Aerospace and Finebesteel 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 Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Aerospace and Finebesteel.
Diversification Opportunities for Hanwha Aerospace and Finebesteel
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanwha and Finebesteel is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Aerospace Co and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Hanwha Aerospace i.e., Hanwha Aerospace and Finebesteel go up and down completely randomly.
Pair Corralation between Hanwha Aerospace and Finebesteel
Assuming the 90 days trading horizon Hanwha Aerospace Co is expected to generate 1.37 times more return on investment than Finebesteel. However, Hanwha Aerospace is 1.37 times more volatile than Finebesteel. It trades about 0.13 of its potential returns per unit of risk. Finebesteel is currently generating about -0.01 per unit of risk. If you would invest 21,100,000 in Hanwha Aerospace Co on August 24, 2024 and sell it today you would earn a total of 14,550,000 from holding Hanwha Aerospace Co or generate 68.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Aerospace Co vs. Finebesteel
Performance |
| Timeline |
| Hanwha Aerospace |
| Finebesteel |
Hanwha Aerospace and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Aerospace and Finebesteel
The main advantage of trading using opposite Hanwha Aerospace and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Aerospace position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.| Hanwha Aerospace vs. Xavis Co | Hanwha Aerospace vs. Hurum Co | Hanwha Aerospace vs. Daishin Balance No8 | Hanwha Aerospace vs. Korea Real Estate |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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