Correlation Between Hansol Chemical and Tway Air
Can any of the company-specific risk be diversified away by investing in both Hansol Chemical and Tway Air 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 Tway Air 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 Tway Air Co, you can compare the effects of market volatilities on Hansol Chemical and Tway Air 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 Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemical and Tway Air.
Diversification Opportunities for Hansol Chemical and Tway Air
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hansol and Tway is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemical Co and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air 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 Tway Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tway Air has no effect on the direction of Hansol Chemical i.e., Hansol Chemical and Tway Air go up and down completely randomly.
Pair Corralation between Hansol Chemical and Tway Air
Assuming the 90 days trading horizon Hansol Chemical Co is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, Hansol Chemical Co is 1.09 times less risky than Tway Air. The stock trades about -0.1 of its potential returns per unit of risk. The Tway Air Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 316,500 in Tway Air Co on October 12, 2024 and sell it today you would lose (42,000) from holding Tway Air Co or give up 13.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Chemical Co vs. Tway Air Co
Performance |
| Timeline |
| Hansol Chemical |
| Tway Air |
Hansol Chemical and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Chemical and Tway Air
The main advantage of trading using opposite Hansol Chemical and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Chemical position performs unexpectedly, Tway Air 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 Tway Air will offset losses from the drop in Tway Air's long position.| Hansol Chemical vs. Lake Materials Co | Hansol Chemical vs. Woori Technology Investment | Hansol Chemical vs. WONIK Materials CoLtd | Hansol Chemical vs. Atinum Investment Co |
| Tway Air vs. Miwon Chemical | Tway Air vs. Hansol Chemical Co | Tway Air vs. Heungkuk Metaltech CoLtd | Tway Air vs. Daejung Chemicals Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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