Correlation Between Hanwha Solutions and Lotte Fine
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and Lotte Fine 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 Solutions and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and Lotte Fine Chemical, you can compare the effects of market volatilities on Hanwha Solutions and Lotte Fine 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 Solutions with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and Lotte Fine.
Diversification Opportunities for Hanwha Solutions and Lotte Fine
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanwha and Lotte is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Hanwha Solutions 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 Solutions are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and Lotte Fine go up and down completely randomly.
Pair Corralation between Hanwha Solutions and Lotte Fine
Assuming the 90 days trading horizon Hanwha Solutions is expected to under-perform the Lotte Fine. In addition to that, Hanwha Solutions is 1.7 times more volatile than Lotte Fine Chemical. It trades about -0.05 of its total potential returns per unit of risk. Lotte Fine Chemical is currently generating about -0.06 per unit of volatility. If you would invest 5,900,000 in Lotte Fine Chemical on September 14, 2024 and sell it today you would lose (1,930,000) from holding Lotte Fine Chemical or give up 32.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.62% |
Values | Daily Returns |
Hanwha Solutions vs. Lotte Fine Chemical
Performance |
Timeline |
Hanwha Solutions |
Lotte Fine Chemical |
Hanwha Solutions and Lotte Fine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanwha Solutions and Lotte Fine
The main advantage of trading using opposite Hanwha Solutions and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, Lotte Fine 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 Lotte Fine will offset losses from the drop in Lotte Fine's long position.Hanwha Solutions vs. Moadata Co | Hanwha Solutions vs. Choil Aluminum | Hanwha Solutions vs. Lotte Data Communication | Hanwha Solutions vs. Incar Financial Service |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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