Correlation Between SH Energy and Haesung Industrial

Can any of the company-specific risk be diversified away by investing in both SH Energy and Haesung Industrial 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 SH Energy and Haesung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SH Energy Chemical and Haesung Industrial Co, you can compare the effects of market volatilities on SH Energy and Haesung Industrial 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 SH Energy with a short position of Haesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Haesung Industrial.

Diversification Opportunities for SH Energy and Haesung Industrial

-0.69

Correlation Coefficient

SH Energy  Haesung Industrial

Excellent diversification

The 3 months correlation between 002360 and Haesung is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Haesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haesung Industrial and SH Energy 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 SH Energy Chemical are associated (or correlated) with Haesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haesung Industrial has no effect on the direction of SH Energy i.e., SH Energy and Haesung Industrial go up and down completely randomly.

Pair Corralation between SH Energy and Haesung Industrial

Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the Haesung Industrial. But the stock apears to be less risky and, when comparing its historical volatility, SH Energy Chemical is 1.04 times less risky than Haesung Industrial. The stock trades about -0.12 of its potential returns per unit of risk. The Haesung Industrial Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  565,500  in Haesung Industrial Co on December 25, 2024 and sell it today you would earn a total of  85,500  from holding Haesung Industrial Co or generate 15.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SH Energy Chemical  vs.  Haesung Industrial Co

SH Energy Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days SH Energy Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Haesung Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haesung Industrial Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haesung Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SH Energy and Haesung Industrial

The main advantage of trading using opposite SH Energy and Haesung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Haesung Industrial 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 Haesung Industrial will offset losses from the drop in Haesung Industrial's long position.

The idea behind SH Energy Chemical and Haesung Industrial Co 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.