Correlation Between Hansol Chemical and DAEMO Engineering

Can any of the company-specific risk be diversified away by investing in both Hansol Chemical and DAEMO Engineering 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 Hansol Chemical and DAEMO Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hansol Chemical Co and DAEMO Engineering Co, you can compare the effects of market volatilities on Hansol Chemical and DAEMO Engineering 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 Hansol Chemical with a short position of DAEMO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Chemical and DAEMO Engineering.

Diversification Opportunities for Hansol Chemical and DAEMO Engineering

0.42

Correlation Coefficient

Hansol Chemical  DAEMO Engineering

Very weak diversification

The 3 months correlation between Hansol and DAEMO is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Chemical Co and DAEMO Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEMO Engineering and Hansol Chemical 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 Hansol Chemical Co are associated (or correlated) with DAEMO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEMO Engineering has no effect on the direction of Hansol Chemical i.e., Hansol Chemical and DAEMO Engineering go up and down completely randomly.

Pair Corralation between Hansol Chemical and DAEMO Engineering

Assuming the 90 days trading horizon Hansol Chemical is expected to generate 1.06 times less return on investment than DAEMO Engineering. In addition to that, Hansol Chemical is 2.13 times more volatile than DAEMO Engineering Co. It trades about 0.11 of its total potential returns per unit of risk. DAEMO Engineering Co is currently generating about 0.25 per unit of volatility. If you would invest  863,032  in DAEMO Engineering Co on October 11, 2024 and sell it today you would earn a total of  60,968  from holding DAEMO Engineering Co or generate 7.06% return on investment over 90 days.

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

Hansol Chemical Co  vs.  DAEMO Engineering Co

Hansol Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansol Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DAEMO Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hansol Chemical and DAEMO Engineering

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

The idea behind Hansol Chemical Co and DAEMO Engineering 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.