Correlation Between SungMoon Electronics and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both SungMoon Electronics and Hanwha 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 SungMoon Electronics and Hanwha Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SungMoon Electronics Co and Hanwha Chemical Corp, you can compare the effects of market volatilities on SungMoon Electronics and Hanwha 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 SungMoon Electronics with a short position of Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SungMoon Electronics and Hanwha Chemical.
Diversification Opportunities for SungMoon Electronics and Hanwha Chemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SungMoon and Hanwha is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SungMoon Electronics Co and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp and SungMoon Electronics 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 SungMoon Electronics Co are associated (or correlated) with Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of SungMoon Electronics i.e., SungMoon Electronics and Hanwha Chemical go up and down completely randomly.
Pair Corralation between SungMoon Electronics and Hanwha Chemical
Assuming the 90 days trading horizon SungMoon Electronics is expected to generate 2.51 times less return on investment than Hanwha Chemical. But when comparing it to its historical volatility, SungMoon Electronics Co is 2.76 times less risky than Hanwha Chemical. It trades about 0.28 of its potential returns per unit of risk. Hanwha Chemical Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,612,000 in Hanwha Chemical Corp on October 29, 2024 and sell it today you would earn a total of 398,000 from holding Hanwha Chemical Corp or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SungMoon Electronics Co vs. Hanwha Chemical Corp
Performance |
| Timeline |
| SungMoon Electronics |
| Hanwha Chemical Corp |
SungMoon Electronics and Hanwha Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SungMoon Electronics and Hanwha Chemical
The main advantage of trading using opposite SungMoon Electronics and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SungMoon Electronics position performs unexpectedly, Hanwha 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 Hanwha Chemical will offset losses from the drop in Hanwha Chemical's long position.| SungMoon Electronics vs. Pureun Mutual Savings | SungMoon Electronics vs. INSUN Environmental New | SungMoon Electronics vs. Dong A Steel Technology | SungMoon Electronics vs. Wireless Power Amplifier |
| Hanwha Chemical vs. Hotel Shilla Co | Hanwha Chemical vs. Chorokbaem Healthcare Co | Hanwha Chemical vs. Ssangyong Information Communication | Hanwha Chemical vs. Samsung Publishing Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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