Correlation Between Ford and Hansol Chemica
Can any of the company-specific risk be diversified away by investing in both Ford and Hansol Chemica 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 Ford and Hansol Chemica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hansol Chemica, you can compare the effects of market volatilities on Ford and Hansol Chemica 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 Ford with a short position of Hansol Chemica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hansol Chemica.
Diversification Opportunities for Ford and Hansol Chemica
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Hansol is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hansol Chemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemica and Ford 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 Ford Motor are associated (or correlated) with Hansol Chemica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemica has no effect on the direction of Ford i.e., Ford and Hansol Chemica go up and down completely randomly.
Pair Corralation between Ford and Hansol Chemica
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.03 times more return on investment than Hansol Chemica. However, Ford is 1.03 times more volatile than Hansol Chemica. It trades about 0.0 of its potential returns per unit of risk. Hansol Chemica is currently generating about -0.26 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Hansol Chemica
Performance |
| Timeline |
| Ford Motor |
| Hansol Chemica |
Ford and Hansol Chemica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hansol Chemica
The main advantage of trading using opposite Ford and Hansol Chemica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hansol Chemica 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 Hansol Chemica will offset losses from the drop in Hansol Chemica's long position.The idea behind Ford Motor and Hansol Chemica pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hansol Chemica vs. LG Chemicals | Hansol Chemica vs. Lotte Chemical Corp | Hansol Chemica vs. Hyundai Steel | Hansol Chemica vs. Seah Steel Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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