Correlation Between Jeong Moon and Hanwha InvestmentSecuri

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

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

Diversification Opportunities for Jeong Moon and Hanwha InvestmentSecuri

-0.32

Correlation Coefficient

Jeong Moon  Hanwha InvestmentSecuri

Very good diversification

The 3 months correlation between Jeong and Hanwha is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Jeong Moon 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 Jeong Moon Information 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 Jeong Moon i.e., Jeong Moon and Hanwha InvestmentSecuri go up and down completely randomly.

Pair Corralation between Jeong Moon and Hanwha InvestmentSecuri

Assuming the 90 days trading horizon Jeong Moon Information is expected to under-perform the Hanwha InvestmentSecuri. But the stock apears to be less risky and, when comparing its historical volatility, Jeong Moon Information is 1.44 times less risky than Hanwha InvestmentSecuri. The stock trades about -0.01 of its potential returns per unit of risk. The Hanwha InvestmentSecurities Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  340,500  in Hanwha InvestmentSecurities Co on December 4, 2024 and sell it today you would earn a total of  3,500  from holding Hanwha InvestmentSecurities Co or generate 1.03% return on investment over 90 days.

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

Jeong Moon Information  vs.  Hanwha InvestmentSecurities Co

Jeong Moon Information

Risk-Adjusted Performance

Very Weak

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

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 Jeong Moon and Hanwha InvestmentSecuri

The main advantage of trading using opposite Jeong Moon and Hanwha InvestmentSecuri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeong Moon 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 Jeong Moon Information 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.