Correlation Between People Technology and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both People Technology and Hannong Chemicals 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 People Technology and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between People Technology and Hannong Chemicals, you can compare the effects of market volatilities on People Technology and Hannong Chemicals 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 People Technology with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of People Technology and Hannong Chemicals.
Diversification Opportunities for People Technology and Hannong Chemicals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between People and Hannong is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding People Technology and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and People Technology 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 People Technology are associated (or correlated) with Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of People Technology i.e., People Technology and Hannong Chemicals go up and down completely randomly.
Pair Corralation between People Technology and Hannong Chemicals
Assuming the 90 days trading horizon People Technology is expected to generate 0.81 times more return on investment than Hannong Chemicals. However, People Technology is 1.23 times less risky than Hannong Chemicals. It trades about 0.04 of its potential returns per unit of risk. Hannong Chemicals is currently generating about -0.03 per unit of risk. If you would invest 4,115,000 in People Technology on September 16, 2024 and sell it today you would earn a total of 70,000 from holding People Technology or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
People Technology vs. Hannong Chemicals
Performance |
| Timeline |
| People Technology |
| Hannong Chemicals |
People Technology and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with People Technology and Hannong Chemicals
The main advantage of trading using opposite People Technology and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if People Technology position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| People Technology vs. Korea New Network | People Technology vs. Solution Advanced Technology | People Technology vs. Busan Industrial Co | People Technology vs. Busan Ind |
| Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. SK Hynix | Hannong Chemicals vs. POSCO Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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