Correlation Between Daewoo SBI and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Hanwha Aerospace 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 Daewoo SBI and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Hanwha Aerospace Co, you can compare the effects of market volatilities on Daewoo SBI and Hanwha Aerospace 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 Daewoo SBI with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Hanwha Aerospace.
Diversification Opportunities for Daewoo SBI and Hanwha Aerospace
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Hanwha is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Daewoo SBI and Hanwha Aerospace
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Hanwha Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 2.29 times less risky than Hanwha Aerospace. The stock trades about -0.3 of its potential returns per unit of risk. The Hanwha Aerospace Co is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 36,700,000 in Hanwha Aerospace Co on September 4, 2024 and sell it today you would lose (4,600,000) from holding Hanwha Aerospace Co or give up 12.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Hanwha Aerospace |
Daewoo SBI and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Hanwha Aerospace
The main advantage of trading using opposite Daewoo SBI and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Hanwha Aerospace 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 Hanwha Aerospace will offset losses from the drop in Hanwha Aerospace's long position.| Daewoo SBI vs. InnoTherapy | Daewoo SBI vs. Ilji Technology Co | Daewoo SBI vs. Global Standard Technology | Daewoo SBI vs. Cots Technology Co |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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