Correlation Between Hanwha InvestmentSecuri and Seoul Broadcasting

Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and Seoul Broadcasting 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 Seoul Broadcasting 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 Seoul Broadcasting System, you can compare the effects of market volatilities on Hanwha InvestmentSecuri and Seoul Broadcasting 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 Seoul Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha InvestmentSecuri and Seoul Broadcasting.

Diversification Opportunities for Hanwha InvestmentSecuri and Seoul Broadcasting

-0.14

Correlation Coefficient

Hanwha InvestmentSecuri  Seoul Broadcasting

Good diversification

The 3 months correlation between Hanwha and Seoul is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System 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 Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and Seoul Broadcasting go up and down completely randomly.

Pair Corralation between Hanwha InvestmentSecuri and Seoul Broadcasting

Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to generate 1.5 times more return on investment than Seoul Broadcasting. However, Hanwha InvestmentSecuri is 1.5 times more volatile than Seoul Broadcasting System. It trades about 0.03 of its potential returns per unit of risk. Seoul Broadcasting System is currently generating about 0.0 per unit of risk. If you would invest  632,000  in Hanwha InvestmentSecurities Co on October 10, 2024 and sell it today you would earn a total of  95,000  from holding Hanwha InvestmentSecurities Co or generate 15.03% return on investment over 90 days.

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

Hanwha InvestmentSecurities Co  vs.  Seoul Broadcasting System

Hanwha InvestmentSecuri

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha InvestmentSecurities Co are ranked lower than 5 (%) 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.

Seoul Broadcasting System

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seoul Broadcasting System are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seoul Broadcasting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanwha InvestmentSecuri and Seoul Broadcasting

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

The idea behind Hanwha InvestmentSecurities Co and Seoul Broadcasting System 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.