Correlation Between Spolytech and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both Spolytech 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 Spolytech and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spolytech Co and Hanwha Solutions, you can compare the effects of market volatilities on Spolytech 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 Spolytech with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spolytech and Hanwha Solutions.
Diversification Opportunities for Spolytech and Hanwha Solutions
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spolytech and Hanwha is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Spolytech Co and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and Spolytech 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 Spolytech Co 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 Spolytech i.e., Spolytech and Hanwha Solutions go up and down completely randomly.
Pair Corralation between Spolytech and Hanwha Solutions
Assuming the 90 days trading horizon Spolytech Co is expected to generate 0.57 times more return on investment than Hanwha Solutions. However, Spolytech Co is 1.75 times less risky than Hanwha Solutions. It trades about 0.31 of its potential returns per unit of risk. Hanwha Solutions is currently generating about 0.14 per unit of risk. If you would invest 133,800 in Spolytech Co on November 6, 2024 and sell it today you would earn a total of 19,600 from holding Spolytech Co or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spolytech Co vs. Hanwha Solutions
Performance |
| Timeline |
| Spolytech |
| Hanwha Solutions |
Spolytech and Hanwha Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spolytech and Hanwha Solutions
The main advantage of trading using opposite Spolytech and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spolytech 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.| Spolytech vs. Kyeryong Construction Industrial | Spolytech vs. Korea Petro Chemical | Spolytech vs. Kumho Petro Chemical | Spolytech vs. Tuksu Engineering ConstructionLtd |
| Hanwha Solutions vs. Woori Technology Investment | Hanwha Solutions vs. FNSTech Co | Hanwha Solutions vs. PNC Technologies co | Hanwha Solutions vs. Dongwoon Anatech 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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