Correlation Between Hanwha Galleria and Hanwha ARIRANG
Can any of the company-specific risk be diversified away by investing in both Hanwha Galleria and Hanwha ARIRANG 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 Hanwha Galleria and Hanwha ARIRANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Galleria Corp and Hanwha ARIRANG SP, you can compare the effects of market volatilities on Hanwha Galleria and Hanwha ARIRANG 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 Hanwha Galleria with a short position of Hanwha ARIRANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Galleria and Hanwha ARIRANG.
Diversification Opportunities for Hanwha Galleria and Hanwha ARIRANG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and Hanwha is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Galleria Corp and Hanwha ARIRANG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha ARIRANG SP and Hanwha Galleria 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 Hanwha Galleria Corp are associated (or correlated) with Hanwha ARIRANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha ARIRANG SP has no effect on the direction of Hanwha Galleria i.e., Hanwha Galleria and Hanwha ARIRANG go up and down completely randomly.
Pair Corralation between Hanwha Galleria and Hanwha ARIRANG
Assuming the 90 days trading horizon Hanwha Galleria is expected to generate 1.36 times less return on investment than Hanwha ARIRANG. But when comparing it to its historical volatility, Hanwha Galleria Corp is 1.49 times less risky than Hanwha ARIRANG. It trades about 0.29 of its potential returns per unit of risk. Hanwha ARIRANG SP is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,622,000 in Hanwha ARIRANG SP on September 4, 2024 and sell it today you would earn a total of 107,500 from holding Hanwha ARIRANG SP or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Galleria Corp vs. Hanwha ARIRANG SP
Performance |
| Timeline |
| Hanwha Galleria Corp |
| Hanwha ARIRANG SP |
Hanwha Galleria and Hanwha ARIRANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Galleria and Hanwha ARIRANG
The main advantage of trading using opposite Hanwha Galleria and Hanwha ARIRANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Galleria position performs unexpectedly, Hanwha ARIRANG 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 ARIRANG will offset losses from the drop in Hanwha ARIRANG's long position.| Hanwha Galleria vs. Busan Industrial Co | Hanwha Galleria vs. Busan Ind | Hanwha Galleria vs. Mirae Asset Daewoo | Hanwha Galleria vs. UNISEM Co |
| Hanwha ARIRANG vs. Hanwha Galleria Corp | Hanwha ARIRANG vs. Hanwha ARIRANG KTB | Hanwha ARIRANG vs. Hanwha ARIRANG KOSPI50 |
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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