Correlation Between Hana Materials and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Hana Materials and Miwon 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 Hana Materials and Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Miwon Chemical, you can compare the effects of market volatilities on Hana Materials and Miwon 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 Hana Materials with a short position of Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Miwon Chemical.
Diversification Opportunities for Hana Materials and Miwon Chemical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hana and Miwon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical and Hana Materials 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 Hana Materials are associated (or correlated) with Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Hana Materials i.e., Hana Materials and Miwon Chemical go up and down completely randomly.
Pair Corralation between Hana Materials and Miwon Chemical
Assuming the 90 days trading horizon Hana Materials is expected to generate 4.4 times more return on investment than Miwon Chemical. However, Hana Materials is 4.4 times more volatile than Miwon Chemical. It trades about 0.35 of its potential returns per unit of risk. Miwon Chemical is currently generating about -0.03 per unit of risk. If you would invest 2,460,000 in Hana Materials on November 27, 2024 and sell it today you would earn a total of 840,000 from holding Hana Materials or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Materials vs. Miwon Chemical
Performance |
| Timeline |
| Hana Materials |
| Miwon Chemical |
Hana Materials and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and Miwon Chemical
The main advantage of trading using opposite Hana Materials and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, Miwon 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Hana Materials vs. Dongkuk Structures Construction | Hana Materials vs. KCC Engineering Construction | Hana Materials vs. Dongwoo Farm To | Hana Materials vs. Woorim Machinery Co |
| Miwon Chemical vs. LG Chem | Miwon Chemical vs. Chunbo Co | Miwon Chemical vs. DukSan Neolux CoLtd | Miwon Chemical vs. Hyosung Chemical Corp |
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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