Correlation Between Hanwha Life and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both Hanwha Life and Next Entertainment 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 Next Entertainment 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 Next Entertainment World, you can compare the effects of market volatilities on Hanwha Life and Next Entertainment 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 Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Life and Next Entertainment.
Diversification Opportunities for Hanwha Life and Next Entertainment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanwha and Next is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Life Insurance and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World 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 Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of Hanwha Life i.e., Hanwha Life and Next Entertainment go up and down completely randomly.
Pair Corralation between Hanwha Life and Next Entertainment
Assuming the 90 days trading horizon Hanwha Life Insurance is expected to generate 0.2 times more return on investment than Next Entertainment. However, Hanwha Life Insurance is 5.06 times less risky than Next Entertainment. It trades about -0.02 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.07 per unit of risk. If you would invest 250,000 in Hanwha Life Insurance on November 4, 2024 and sell it today you would lose (500.00) from holding Hanwha Life Insurance or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Life Insurance vs. Next Entertainment World
Performance |
| Timeline |
| Hanwha Life Insurance |
| Next Entertainment World |
Hanwha Life and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Life and Next Entertainment
The main advantage of trading using opposite Hanwha Life and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Life position performs unexpectedly, Next Entertainment 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 Next Entertainment will offset losses from the drop in Next Entertainment's long position.| Hanwha Life vs. Korean Drug Co | Hanwha Life vs. SK Chemicals Co | Hanwha Life vs. LG Chemicals | Hanwha Life vs. Daejung Chemicals Metals |
| Next Entertainment vs. Solus Advanced Materials | Next Entertainment vs. Hanjoo Light Metal | Next Entertainment vs. LG Chemicals | Next Entertainment vs. Top Material 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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