Correlation Between SK Chemicals and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both SK Chemicals 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 SK Chemicals and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Chemicals Co and Hannong Chemicals, you can compare the effects of market volatilities on SK Chemicals 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 SK Chemicals with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Chemicals and Hannong Chemicals.
Diversification Opportunities for SK Chemicals and Hannong Chemicals
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 28513K and Hannong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SK Chemicals Co and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and SK Chemicals 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 SK Chemicals Co 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 SK Chemicals i.e., SK Chemicals and Hannong Chemicals go up and down completely randomly.
Pair Corralation between SK Chemicals and Hannong Chemicals
Assuming the 90 days trading horizon SK Chemicals Co is expected to generate 0.54 times more return on investment than Hannong Chemicals. However, SK Chemicals Co is 1.86 times less risky than Hannong Chemicals. It trades about -0.11 of its potential returns per unit of risk. Hannong Chemicals is currently generating about -0.07 per unit of risk. If you would invest 2,125,000 in SK Chemicals Co on November 8, 2024 and sell it today you would lose (244,000) from holding SK Chemicals Co or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Chemicals Co vs. Hannong Chemicals
Performance |
| Timeline |
| SK Chemicals |
| Hannong Chemicals |
SK Chemicals and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Chemicals and Hannong Chemicals
The main advantage of trading using opposite SK Chemicals and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Chemicals 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.| SK Chemicals vs. Kumho Petro Chemical | SK Chemicals vs. Kumho Petro Chemical | SK Chemicals vs. SK Chemicals Co |
| Hannong Chemicals vs. LG Display Co | Hannong Chemicals vs. Sangsin Energy Display | Hannong Chemicals vs. Handok Clean Tech | Hannong Chemicals vs. SK Chemicals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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