Correlation Between Dongjin Semichem and Hanwha InvestmentSecuri

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

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

Diversification Opportunities for Dongjin Semichem and Hanwha InvestmentSecuri

-0.28

Correlation Coefficient

Dongjin Semichem  Hanwha InvestmentSecuri

Very good diversification

The 3 months correlation between Dongjin and Hanwha is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dongjin Semichem Co and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Dongjin Semichem 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 Dongjin Semichem Co are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Dongjin Semichem i.e., Dongjin Semichem and Hanwha InvestmentSecuri go up and down completely randomly.

Pair Corralation between Dongjin Semichem and Hanwha InvestmentSecuri

Assuming the 90 days trading horizon Dongjin Semichem Co is expected to generate 1.66 times more return on investment than Hanwha InvestmentSecuri. However, Dongjin Semichem is 1.66 times more volatile than Hanwha InvestmentSecurities Co. It trades about 0.2 of its potential returns per unit of risk. Hanwha InvestmentSecurities Co is currently generating about 0.0 per unit of risk. If you would invest  2,090,000  in Dongjin Semichem Co on December 30, 2024 and sell it today you would earn a total of  910,000  from holding Dongjin Semichem Co or generate 43.54% return on investment over 90 days.

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

Dongjin Semichem Co  vs.  Hanwha InvestmentSecurities Co

Dongjin Semichem

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dongjin Semichem Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongjin Semichem sustained solid returns over the last few months and may actually be approaching a breakup point.

Hanwha InvestmentSecuri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanwha InvestmentSecurities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanwha InvestmentSecuri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dongjin Semichem and Hanwha InvestmentSecuri

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

The idea behind Dongjin Semichem Co and Hanwha InvestmentSecurities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.