Correlation Between Hansol Chemica and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Hansol Chemica and SEOJEON ELECTRIC 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 Hansol Chemica and SEOJEON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansol Chemica and SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Hansol Chemica and SEOJEON ELECTRIC 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 Hansol Chemica with a short position of SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemica and SEOJEON ELECTRIC.
Diversification Opportunities for Hansol Chemica and SEOJEON ELECTRIC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hansol and SEOJEON is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemica and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC and Hansol Chemica 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 Hansol Chemica are associated (or correlated) with SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Hansol Chemica i.e., Hansol Chemica and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Hansol Chemica and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Hansol Chemica is expected to under-perform the SEOJEON ELECTRIC. But the stock apears to be less risky and, when comparing its historical volatility, Hansol Chemica is 1.74 times less risky than SEOJEON ELECTRIC. The stock trades about -0.09 of its potential returns per unit of risk. The SEOJEON ELECTRIC MACHINERY is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 416,500 in SEOJEON ELECTRIC MACHINERY on November 4, 2024 and sell it today you would earn a total of 58,000 from holding SEOJEON ELECTRIC MACHINERY or generate 13.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Chemica vs. SEOJEON ELECTRIC MACHINERY
Performance |
| Timeline |
| Hansol Chemica |
| SEOJEON ELECTRIC MAC |
Hansol Chemica and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Chemica and SEOJEON ELECTRIC
The main advantage of trading using opposite Hansol Chemica and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Chemica position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.| Hansol Chemica vs. Seoul Electronics Telecom | Hansol Chemica vs. Daol Investment Securities | Hansol Chemica vs. Sangsangin Investment Securities | Hansol Chemica vs. Golden Bridge Investment |
| SEOJEON ELECTRIC vs. Dongbang Transport Logistics | SEOJEON ELECTRIC vs. Echomarketing CoLtd | SEOJEON ELECTRIC vs. Songwon Industrial Co | SEOJEON ELECTRIC vs. Youngsin Metal Industrial |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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