Correlation Between Solution Advanced and Hyosung Advanced
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Hyosung Advanced 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 Solution Advanced and Hyosung Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Hyosung Advanced Materials, you can compare the effects of market volatilities on Solution Advanced and Hyosung Advanced 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 Solution Advanced with a short position of Hyosung Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Hyosung Advanced.
Diversification Opportunities for Solution Advanced and Hyosung Advanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Hyosung is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Hyosung Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Advanced Mat and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Hyosung Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Advanced Mat has no effect on the direction of Solution Advanced i.e., Solution Advanced and Hyosung Advanced go up and down completely randomly.
Pair Corralation between Solution Advanced and Hyosung Advanced
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.44 times more return on investment than Hyosung Advanced. However, Solution Advanced is 1.44 times more volatile than Hyosung Advanced Materials. It trades about -0.02 of its potential returns per unit of risk. Hyosung Advanced Materials is currently generating about -0.04 per unit of risk. If you would invest 282,360 in Solution Advanced Technology on September 13, 2024 and sell it today you would lose (140,960) from holding Solution Advanced Technology or give up 49.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Hyosung Advanced Materials
Performance |
| Timeline |
| Solution Advanced |
| Hyosung Advanced Mat |
Solution Advanced and Hyosung Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Hyosung Advanced
The main advantage of trading using opposite Solution Advanced and Hyosung Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Hyosung Advanced 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 Hyosung Advanced will offset losses from the drop in Hyosung Advanced's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Hyosung Advanced vs. Solution Advanced Technology | Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Sam Chun Dang |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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