Correlation Between Hanwha InvestmentSecuri and Korea Petro

Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and Korea Petro 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 InvestmentSecuri and Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hanwha InvestmentSecuri and Korea Petro

-0.62

Correlation Coefficient

Hanwha InvestmentSecuri  Korea Petro

Excellent diversification

The 3 months correlation between Hanwha and Korea is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro Chemical and Hanwha InvestmentSecuri 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 InvestmentSecurities Co are associated (or correlated) with Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and Korea Petro go up and down completely randomly.

Pair Corralation between Hanwha InvestmentSecuri and Korea Petro

Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to under-perform the Korea Petro. In addition to that, Hanwha InvestmentSecuri is 1.22 times more volatile than Korea Petro Chemical. It trades about -0.12 of its total potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.12 per unit of volatility. If you would invest  8,960,000  in Korea Petro Chemical on September 22, 2024 and sell it today you would lose (1,070,000) from holding Korea Petro Chemical or give up 11.94% of portfolio value over 90 days.

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

Hanwha InvestmentSecurities Co  vs.  Korea Petro Chemical

Hanwha InvestmentSecuri

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha InvestmentSecurities Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanwha InvestmentSecuri sustained solid returns over the last few months and may actually be approaching a breakup point.

Korea Petro Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Petro Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hanwha InvestmentSecuri and Korea Petro

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

The idea behind Hanwha InvestmentSecurities Co and Korea Petro Chemical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.