Correlation Between Hansol Chemical and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Hansol Chemical and Dongnam Chemical 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 Chemical and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansol Chemical Co and Dongnam Chemical Co, you can compare the effects of market volatilities on Hansol Chemical and Dongnam Chemical 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 Chemical with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemical and Dongnam Chemical.
Diversification Opportunities for Hansol Chemical and Dongnam Chemical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hansol and Dongnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemical Co and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Hansol Chemical 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 Chemical Co are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Hansol Chemical i.e., Hansol Chemical and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Hansol Chemical and Dongnam Chemical
Assuming the 90 days trading horizon Hansol Chemical Co is expected to under-perform the Dongnam Chemical. In addition to that, Hansol Chemical is 2.03 times more volatile than Dongnam Chemical Co. It trades about -0.07 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.01 per unit of volatility. If you would invest 3,388,254 in Dongnam Chemical Co on September 14, 2024 and sell it today you would lose (233,254) from holding Dongnam Chemical Co or give up 6.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Chemical Co vs. Dongnam Chemical Co
Performance |
| Timeline |
| Hansol Chemical |
| Dongnam Chemical |
Hansol Chemical and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Chemical and Dongnam Chemical
The main advantage of trading using opposite Hansol Chemical and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Chemical position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Hansol Chemical vs. Shinsegae Food | Hansol Chemical vs. Hyundai Engineering Plastics | Hansol Chemical vs. CKH Food Health | Hansol Chemical vs. PI Advanced Materials |
| Dongnam Chemical vs. FNSTech Co | Dongnam Chemical vs. Inzi Display CoLtd | Dongnam Chemical vs. Shinsegae Information Communication | Dongnam Chemical vs. Dong A Steel Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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