Correlation Between SIMMTECH and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both SIMMTECH 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 SIMMTECH and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMMTECH Co and Hanwha Aerospace Co, you can compare the effects of market volatilities on SIMMTECH 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 SIMMTECH with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMMTECH and Hanwha Aerospace.
Diversification Opportunities for SIMMTECH and Hanwha Aerospace
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SIMMTECH and Hanwha is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and SIMMTECH 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 SIMMTECH Co 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 SIMMTECH i.e., SIMMTECH and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between SIMMTECH and Hanwha Aerospace
Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Hanwha Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, SIMMTECH Co is 1.16 times less risky than Hanwha Aerospace. The stock trades about -0.48 of its potential returns per unit of risk. The Hanwha Aerospace Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 37,750,000 in Hanwha Aerospace Co on August 28, 2024 and sell it today you would lose (1,850,000) from holding Hanwha Aerospace Co or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMMTECH Co vs. Hanwha Aerospace Co
Performance |
| Timeline |
| SIMMTECH |
| Hanwha Aerospace |
SIMMTECH and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMMTECH and Hanwha Aerospace
The main advantage of trading using opposite SIMMTECH and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMMTECH 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.| SIMMTECH vs. Shinil Electronics Co | SIMMTECH vs. Seoul Electronics Telecom | SIMMTECH vs. ABCO Electronics Co | SIMMTECH vs. Daekyung Machinery Engineering |
| Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. Hyundai Motor Co | Hanwha Aerospace vs. Hyundai Motor |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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