Correlation Between Coloray International and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both Coloray International and Hanwha Aerospace 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 Coloray International and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Hanwha Aerospace Co, you can compare the effects of market volatilities on Coloray International and Hanwha Aerospace 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 Coloray International with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Hanwha Aerospace.
Diversification Opportunities for Coloray International and Hanwha Aerospace
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coloray and Hanwha is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and Coloray International 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 Coloray International Investment are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of Coloray International i.e., Coloray International and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between Coloray International and Hanwha Aerospace
Assuming the 90 days trading horizon Coloray International Investment is expected to generate 0.6 times more return on investment than Hanwha Aerospace. However, Coloray International Investment is 1.67 times less risky than Hanwha Aerospace. It trades about -0.18 of its potential returns per unit of risk. Hanwha Aerospace Co is currently generating about -0.15 per unit of risk. If you would invest 66,700 in Coloray International Investment on August 30, 2024 and sell it today you would lose (6,700) from holding Coloray International Investment or give up 10.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Hanwha Aerospace Co
Performance |
| Timeline |
| Coloray International |
| Hanwha Aerospace |
Coloray International and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Hanwha Aerospace
The main advantage of trading using opposite Coloray International and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Hanwha Aerospace 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 Aerospace will offset losses from the drop in Hanwha Aerospace's long position.| Coloray International vs. Sangsin Energy Display | Coloray International vs. Shinsegae Information Communication | Coloray International vs. FNC Entertainment Co | Coloray International vs. Alton Sports CoLtd |
| Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. Samsung Electronics Co | Hanwha Aerospace vs. KB Financial Group | Hanwha Aerospace vs. Shinhan Financial Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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