Correlation Between Dongwoo Farm and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm and Hansol Chemical 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 Dongwoo Farm and Hansol Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Hansol Chemical Co, you can compare the effects of market volatilities on Dongwoo Farm and Hansol Chemical 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 Dongwoo Farm with a short position of Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Hansol Chemical.
Diversification Opportunities for Dongwoo Farm and Hansol Chemical
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongwoo and Hansol is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and Dongwoo Farm 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 Dongwoo Farm To are associated (or correlated) with Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of Dongwoo Farm i.e., Dongwoo Farm and Hansol Chemical go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Hansol Chemical
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.23 times more return on investment than Hansol Chemical. However, Dongwoo Farm To is 4.35 times less risky than Hansol Chemical. It trades about 0.39 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about 0.06 per unit of risk. If you would invest 190,012 in Dongwoo Farm To on October 14, 2024 and sell it today you would earn a total of 8,488 from holding Dongwoo Farm To or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Hansol Chemical Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Hansol Chemical |
Dongwoo Farm and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Hansol Chemical
The main advantage of trading using opposite Dongwoo Farm and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm position performs unexpectedly, Hansol Chemical 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 Hansol Chemical will offset losses from the drop in Hansol Chemical's long position.| Dongwoo Farm vs. Daewoo Electronic Components | Dongwoo Farm vs. DC Media Co | Dongwoo Farm vs. Samwha Electronics Co | Dongwoo Farm vs. Wave Electronics Co |
| Hansol Chemical vs. Mobile Appliance | Hansol Chemical vs. Dongwoo Farm To | Hansol Chemical vs. Sempio Foods Co | Hansol Chemical vs. Hanjin Transportation 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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