Correlation Between Innometry and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both Innometry and Hanwha 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 Innometry and Hanwha Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innometry Co and Hanwha Chemical Corp, you can compare the effects of market volatilities on Innometry and Hanwha 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 Innometry with a short position of Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innometry and Hanwha Chemical.
Diversification Opportunities for Innometry and Hanwha Chemical
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innometry and Hanwha is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Innometry Co and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp and Innometry 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 Innometry Co are associated (or correlated) with Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of Innometry i.e., Innometry and Hanwha Chemical go up and down completely randomly.
Pair Corralation between Innometry and Hanwha Chemical
Assuming the 90 days trading horizon Innometry Co is expected to generate 0.87 times more return on investment than Hanwha Chemical. However, Innometry Co is 1.15 times less risky than Hanwha Chemical. It trades about -0.03 of its potential returns per unit of risk. Hanwha Chemical Corp is currently generating about -0.05 per unit of risk. If you would invest 1,377,000 in Innometry Co on October 14, 2024 and sell it today you would lose (633,000) from holding Innometry Co or give up 45.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.23% |
| Values | Daily Returns |
Innometry Co vs. Hanwha Chemical Corp
Performance |
| Timeline |
| Innometry |
| Hanwha Chemical Corp |
Innometry and Hanwha Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innometry and Hanwha Chemical
The main advantage of trading using opposite Innometry and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innometry position performs unexpectedly, Hanwha 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 Hanwha Chemical will offset losses from the drop in Hanwha Chemical's long position.| Innometry vs. KCC Engineering Construction | Innometry vs. Korea Investment Holdings | Innometry vs. Nam Hwa Construction | Innometry vs. SV Investment |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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