Correlation Between Miwon Chemical and HMM
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and HMM 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 Miwon Chemical and HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and HMM Co, you can compare the effects of market volatilities on Miwon Chemical and HMM 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 Miwon Chemical with a short position of HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and HMM.
Diversification Opportunities for Miwon Chemical and HMM
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Miwon and HMM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and HMM go up and down completely randomly.
Pair Corralation between Miwon Chemical and HMM
Assuming the 90 days trading horizon Miwon Chemical is expected to under-perform the HMM. But the stock apears to be less risky and, when comparing its historical volatility, Miwon Chemical is 3.24 times less risky than HMM. The stock trades about -0.08 of its potential returns per unit of risk. The HMM Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,712,000 in HMM Co on September 1, 2024 and sell it today you would earn a total of 84,000 from holding HMM Co or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. HMM Co
Performance |
| Timeline |
| Miwon Chemical |
| HMM Co |
Miwon Chemical and HMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and HMM
The main advantage of trading using opposite Miwon Chemical and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. LIG ES SPAC | Miwon Chemical vs. Youngchang Chemical 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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