Correlation Between Hanwha Life and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Hanwha Life and Daejoo Electronic 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 Hanwha Life and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Life Insurance and Daejoo Electronic Materials, you can compare the effects of market volatilities on Hanwha Life and Daejoo Electronic 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 Hanwha Life with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Life and Daejoo Electronic.
Diversification Opportunities for Hanwha Life and Daejoo Electronic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanwha and Daejoo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Life Insurance and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Hanwha Life 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 Hanwha Life Insurance are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Hanwha Life i.e., Hanwha Life and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Hanwha Life and Daejoo Electronic
Assuming the 90 days trading horizon Hanwha Life Insurance is expected to under-perform the Daejoo Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Hanwha Life Insurance is 6.71 times less risky than Daejoo Electronic. The stock trades about -0.07 of its potential returns per unit of risk. The Daejoo Electronic Materials is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 7,480,000 in Daejoo Electronic Materials on October 28, 2024 and sell it today you would earn a total of 2,850,000 from holding Daejoo Electronic Materials or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Life Insurance vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Hanwha Life Insurance |
| Daejoo Electronic |
Hanwha Life and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Life and Daejoo Electronic
The main advantage of trading using opposite Hanwha Life and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Life position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Hanwha Life vs. KB Financial Group | Hanwha Life vs. Shinhan Financial Group | Hanwha Life vs. Hana Financial | Hanwha Life vs. Woori Financial Group |
| Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. SK Hynix | Daejoo Electronic vs. HMM 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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