Correlation Between Hannong Chemicals and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals and Choil Aluminum 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 Hannong Chemicals and Choil Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Choil Aluminum, you can compare the effects of market volatilities on Hannong Chemicals and Choil Aluminum 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 Hannong Chemicals with a short position of Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Choil Aluminum.
Diversification Opportunities for Hannong Chemicals and Choil Aluminum
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hannong and Choil is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum and Hannong Chemicals 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 Hannong Chemicals are associated (or correlated) with Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Hannong Chemicals i.e., Hannong Chemicals and Choil Aluminum go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Choil Aluminum
Assuming the 90 days trading horizon Hannong Chemicals is expected to generate 1.04 times less return on investment than Choil Aluminum. In addition to that, Hannong Chemicals is 2.71 times more volatile than Choil Aluminum. It trades about 0.11 of its total potential returns per unit of risk. Choil Aluminum is currently generating about 0.32 per unit of volatility. If you would invest 140,000 in Choil Aluminum on October 27, 2024 and sell it today you would earn a total of 9,800 from holding Choil Aluminum or generate 7.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hannong Chemicals vs. Choil Aluminum
Performance |
Timeline |
Hannong Chemicals |
Choil Aluminum |
Hannong Chemicals and Choil Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hannong Chemicals and Choil Aluminum
The main advantage of trading using opposite Hannong Chemicals and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.Hannong Chemicals vs. DAEDUCK ELECTRONICS CoLtd | Hannong Chemicals vs. Hwasung Industrial Co | Hannong Chemicals vs. Daesung Industrial Co | Hannong Chemicals vs. Korea Electronic Certification |
Choil Aluminum vs. Dgb Financial | Choil Aluminum vs. KPX Green Chemical | Choil Aluminum vs. FOODWELL Co | Choil Aluminum vs. OE Solutions Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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