Correlation Between Woorim Machinery and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery 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 Woorim Machinery and Hansol Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woorim Machinery Co and Hansol Chemical Co, you can compare the effects of market volatilities on Woorim Machinery 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 Woorim Machinery with a short position of Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Hansol Chemical.
Diversification Opportunities for Woorim Machinery and Hansol Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woorim and Hansol is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and Woorim Machinery 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 Woorim Machinery Co 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 Woorim Machinery i.e., Woorim Machinery and Hansol Chemical go up and down completely randomly.
Pair Corralation between Woorim Machinery and Hansol Chemical
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.43 times more return on investment than Hansol Chemical. However, Woorim Machinery is 1.43 times more volatile than Hansol Chemical Co. It trades about 0.0 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.1 per unit of risk. If you would invest 552,487 in Woorim Machinery Co on September 14, 2024 and sell it today you would lose (76,487) from holding Woorim Machinery Co or give up 13.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Hansol Chemical Co
Performance |
| Timeline |
| Woorim Machinery |
| Hansol Chemical |
Woorim Machinery and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Hansol Chemical
The main advantage of trading using opposite Woorim Machinery and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery 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.| Woorim Machinery vs. Sungchang Autotech Co | Woorim Machinery vs. Hana Financial | Woorim Machinery vs. Yura Tech Co | Woorim Machinery vs. THiRA UTECH LTD |
| Hansol Chemical vs. Shinsegae Food | Hansol Chemical vs. Hyundai Engineering Plastics | Hansol Chemical vs. CKH Food Health | Hansol Chemical vs. PI Advanced Materials |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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