Correlation Between Hansol Chemical and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Hansol Chemical and LG Chemicals 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 LG Chemicals 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 LG Chemicals, you can compare the effects of market volatilities on Hansol Chemical and LG Chemicals 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 LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemical and LG Chemicals.
Diversification Opportunities for Hansol Chemical and LG Chemicals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hansol and 051910 is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemical Co and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Hansol Chemical i.e., Hansol Chemical and LG Chemicals go up and down completely randomly.
Pair Corralation between Hansol Chemical and LG Chemicals
Assuming the 90 days trading horizon Hansol Chemical Co is expected to generate 1.08 times more return on investment than LG Chemicals. However, Hansol Chemical is 1.08 times more volatile than LG Chemicals. It trades about -0.07 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.08 per unit of risk. If you would invest 17,805,700 in Hansol Chemical Co on September 14, 2024 and sell it today you would lose (7,785,700) from holding Hansol Chemical Co or give up 43.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Chemical Co vs. LG Chemicals
Performance |
| Timeline |
| Hansol Chemical |
| LG Chemicals |
Hansol Chemical and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Chemical and LG Chemicals
The main advantage of trading using opposite Hansol Chemical and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Chemical position performs unexpectedly, LG Chemicals 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 LG Chemicals will offset losses from the drop in LG Chemicals' 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 |
| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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