Correlation Between Hyosung Chemical and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Hyosung Chemical 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 Hyosung Chemical and Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Chemical Corp and Miwon Chemical, you can compare the effects of market volatilities on Hyosung Chemical 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 Hyosung Chemical with a short position of Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Chemical and Miwon Chemical.
Diversification Opportunities for Hyosung Chemical and Miwon Chemical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyosung and Miwon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Chemical Corp and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical and Hyosung Chemical 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 Hyosung Chemical Corp 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 Hyosung Chemical i.e., Hyosung Chemical and Miwon Chemical go up and down completely randomly.
Pair Corralation between Hyosung Chemical and Miwon Chemical
Assuming the 90 days trading horizon Hyosung Chemical Corp is expected to under-perform the Miwon Chemical. In addition to that, Hyosung Chemical is 3.3 times more volatile than Miwon Chemical. It trades about -0.41 of its total potential returns per unit of risk. Miwon Chemical is currently generating about -0.23 per unit of volatility. If you would invest 7,990,000 in Miwon Chemical on August 25, 2024 and sell it today you would lose (290,000) from holding Miwon Chemical or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hyosung Chemical Corp vs. Miwon Chemical
Performance |
| Timeline |
| Hyosung Chemical Corp |
| Miwon Chemical |
Hyosung Chemical and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Chemical and Miwon Chemical
The main advantage of trading using opposite Hyosung Chemical and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Chemical 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.| Hyosung Chemical vs. Shinsegae Information Communication | Hyosung Chemical vs. PH Tech Co | Hyosung Chemical vs. CU Tech Corp | Hyosung Chemical vs. Jeju Semiconductor Corp |
| Miwon Chemical vs. SBI Investment KOREA | Miwon Chemical vs. Golden Bridge Investment | Miwon Chemical vs. SK Telecom Co | Miwon Chemical vs. KT Submarine Telecom |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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