Correlation Between Danal Co and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both Danal Co and Hannong Chemicals 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 Danal Co and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danal Co and Hannong Chemicals, you can compare the effects of market volatilities on Danal Co and Hannong Chemicals 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 Danal Co with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danal Co and Hannong Chemicals.
Diversification Opportunities for Danal Co and Hannong Chemicals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Danal and Hannong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Danal Co and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and Danal Co 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 Danal Co are associated (or correlated) with Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of Danal Co i.e., Danal Co and Hannong Chemicals go up and down completely randomly.
Pair Corralation between Danal Co and Hannong Chemicals
Assuming the 90 days trading horizon Danal Co is expected to generate 0.83 times more return on investment than Hannong Chemicals. However, Danal Co is 1.21 times less risky than Hannong Chemicals. It trades about -0.21 of its potential returns per unit of risk. Hannong Chemicals is currently generating about -0.19 per unit of risk. If you would invest 324,000 in Danal Co on September 12, 2024 and sell it today you would lose (47,000) from holding Danal Co or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danal Co vs. Hannong Chemicals
Performance |
| Timeline |
| Danal Co |
| Hannong Chemicals |
Danal Co and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danal Co and Hannong Chemicals
The main advantage of trading using opposite Danal Co and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danal Co position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| Danal Co vs. Dongbu Insurance Co | Danal Co vs. Dongbang Transport Logistics | Danal Co vs. MEDIANA CoLtd | Danal Co vs. FNC Entertainment Co |
| Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. SK Hynix | Hannong Chemicals vs. POSCO Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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