Correlation Between Industrial Bank and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Hanwha Solutions 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 Industrial Bank and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Hanwha Solutions, you can compare the effects of market volatilities on Industrial Bank and Hanwha Solutions 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 Industrial Bank with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Hanwha Solutions.
Diversification Opportunities for Industrial Bank and Hanwha Solutions
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and Hanwha is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and Industrial Bank 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 Industrial Bank are associated (or correlated) with Hanwha Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Solutions has no effect on the direction of Industrial Bank i.e., Industrial Bank and Hanwha Solutions go up and down completely randomly.
Pair Corralation between Industrial Bank and Hanwha Solutions
Assuming the 90 days trading horizon Industrial Bank is expected to generate 44.01 times less return on investment than Hanwha Solutions. But when comparing it to its historical volatility, Industrial Bank is 3.75 times less risky than Hanwha Solutions. It trades about 0.01 of its potential returns per unit of risk. Hanwha Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,977,000 in Hanwha Solutions on November 27, 2024 and sell it today you would earn a total of 88,000 from holding Hanwha Solutions or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Hanwha Solutions
Performance |
| Timeline |
| Industrial Bank |
| Hanwha Solutions |
Industrial Bank and Hanwha Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Hanwha Solutions
The main advantage of trading using opposite Industrial Bank and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Hanwha Solutions 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 Solutions will offset losses from the drop in Hanwha Solutions' long position.| Industrial Bank vs. Hanjoo Light Metal | Industrial Bank vs. Sempio Foods Co | Industrial Bank vs. Dongil Metal Co | Industrial Bank vs. Daesung Hi Tech Co |
| Hanwha Solutions vs. Orbitech Co | Hanwha Solutions vs. Inzi Display CoLtd | Hanwha Solutions vs. RFTech Co | Hanwha Solutions vs. LG Display 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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