Correlation Between Hanwha Solutions and OCI
Can any of the company-specific risk be diversified away by investing in both Hanwha Solutions and OCI 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 OCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Solutions and OCI Co, you can compare the effects of market volatilities on Hanwha Solutions and OCI 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 OCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Solutions and OCI.
Diversification Opportunities for Hanwha Solutions and OCI
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanwha and OCI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Solutions and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co 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 OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of Hanwha Solutions i.e., Hanwha Solutions and OCI go up and down completely randomly.
Pair Corralation between Hanwha Solutions and OCI
Assuming the 90 days trading horizon Hanwha Solutions is expected to generate 1.03 times less return on investment than OCI. But when comparing it to its historical volatility, Hanwha Solutions is 1.05 times less risky than OCI. It trades about 0.09 of its potential returns per unit of risk. OCI Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,880,000 in OCI Co on December 30, 2024 and sell it today you would earn a total of 1,140,000 from holding OCI Co or generate 19.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hanwha Solutions vs. OCI Co
Performance |
Timeline |
Hanwha Solutions |
OCI Co |
Hanwha Solutions and OCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanwha Solutions and OCI
The main advantage of trading using opposite Hanwha Solutions and OCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Solutions position performs unexpectedly, OCI 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 OCI will offset losses from the drop in OCI's long position.Hanwha Solutions vs. T3 Entertainment Co | Hanwha Solutions vs. MediaZen | Hanwha Solutions vs. Digital Power Communications | Hanwha Solutions vs. TJ media Co |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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