Correlation Between Pan Entertainment and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both Pan Entertainment and Hanwha Chemical 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 Pan Entertainment and Hanwha Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Entertainment Co and Hanwha Chemical Corp, you can compare the effects of market volatilities on Pan Entertainment and Hanwha Chemical 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 Pan Entertainment with a short position of Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Entertainment and Hanwha Chemical.
Diversification Opportunities for Pan Entertainment and Hanwha Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pan and Hanwha is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp and Pan Entertainment 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 Pan Entertainment Co are associated (or correlated) with Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and Hanwha Chemical go up and down completely randomly.
Pair Corralation between Pan Entertainment and Hanwha Chemical
Assuming the 90 days trading horizon Pan Entertainment Co is expected to generate 0.59 times more return on investment than Hanwha Chemical. However, Pan Entertainment Co is 1.71 times less risky than Hanwha Chemical. It trades about 0.05 of its potential returns per unit of risk. Hanwha Chemical Corp is currently generating about -0.14 per unit of risk. If you would invest 208,500 in Pan Entertainment Co on September 15, 2024 and sell it today you would earn a total of 11,000 from holding Pan Entertainment Co or generate 5.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pan Entertainment Co vs. Hanwha Chemical Corp
Performance |
Timeline |
Pan Entertainment |
Hanwha Chemical Corp |
Pan Entertainment and Hanwha Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pan Entertainment and Hanwha Chemical
The main advantage of trading using opposite Pan Entertainment and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Entertainment position performs unexpectedly, Hanwha Chemical 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 Chemical will offset losses from the drop in Hanwha Chemical's long position.Pan Entertainment vs. YG Entertainment | Pan Entertainment vs. JYP Entertainment | Pan Entertainment vs. Cube Entertainment | Pan Entertainment vs. FNC Entertainment 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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