Correlation Between Automobile and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Automobile and Hansol 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 Automobile and Hansol Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Hansol Chemical Co, you can compare the effects of market volatilities on Automobile and Hansol 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 Automobile with a short position of Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Hansol Chemical.
Diversification Opportunities for Automobile and Hansol Chemical
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Hansol is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and Automobile 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 Automobile Pc are associated (or correlated) with Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of Automobile i.e., Automobile and Hansol Chemical go up and down completely randomly.
Pair Corralation between Automobile and Hansol Chemical
Assuming the 90 days trading horizon Automobile Pc is expected to generate 1.65 times more return on investment than Hansol Chemical. However, Automobile is 1.65 times more volatile than Hansol Chemical Co. It trades about 0.04 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.26 per unit of risk. If you would invest 68,000 in Automobile Pc on August 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Automobile Pc or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Hansol Chemical Co
Performance |
| Timeline |
| Automobile Pc |
| Hansol Chemical |
Automobile and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Hansol Chemical
The main advantage of trading using opposite Automobile and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Hansol 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 Hansol Chemical will offset losses from the drop in Hansol Chemical's long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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