Correlation Between Namhae Chemical and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Hanwha Aerospace 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 Namhae Chemical and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Hanwha Aerospace Co, you can compare the effects of market volatilities on Namhae Chemical and Hanwha Aerospace 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 Namhae Chemical with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Hanwha Aerospace.
Diversification Opportunities for Namhae Chemical and Hanwha Aerospace
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhae and Hanwha is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Namhae 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 Namhae Chemical are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Namhae Chemical and Hanwha Aerospace
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.25 times more return on investment than Hanwha Aerospace. However, Namhae Chemical is 4.07 times less risky than Hanwha Aerospace. It trades about -0.12 of its potential returns per unit of risk. Hanwha Aerospace Co is currently generating about -0.15 per unit of risk. If you would invest 653,000 in Namhae Chemical on September 1, 2024 and sell it today you would lose (18,000) from holding Namhae Chemical or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Namhae Chemical vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Namhae Chemical |
| Hanwha Aerospace |
Namhae Chemical and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Hanwha Aerospace
The main advantage of trading using opposite Namhae Chemical and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Hanwha Aerospace 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 Aerospace will offset losses from the drop in Hanwha Aerospace's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Hyundai Steel |
| Hanwha Aerospace vs. Shinhan Inverse Silver | Hanwha Aerospace vs. Namhae Chemical | Hanwha Aerospace vs. Taegu Broadcasting | Hanwha Aerospace vs. System and Application |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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