Correlation Between EBEST Investment and Hansol Chemica

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

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

Diversification Opportunities for EBEST Investment and Hansol Chemica

0.37

Correlation Coefficient

EBEST Investment  Hansol Chemica

Weak diversification

The 3 months correlation between EBEST and Hansol is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Hansol Chemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemica and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Hansol Chemica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemica has no effect on the direction of EBEST Investment i.e., EBEST Investment and Hansol Chemica go up and down completely randomly.

Pair Corralation between EBEST Investment and Hansol Chemica

Assuming the 90 days trading horizon EBEST Investment is expected to generate 55.41 times less return on investment than Hansol Chemica. But when comparing it to its historical volatility, EBEST Investment Securities is 1.9 times less risky than Hansol Chemica. It trades about 0.0 of its potential returns per unit of risk. Hansol Chemica is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,740,000  in Hansol Chemica on December 1, 2024 and sell it today you would earn a total of  1,240,000  from holding Hansol Chemica or generate 12.73% return on investment over 90 days.

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

EBEST Investment Securities  vs.  Hansol Chemica

EBEST Investment Sec

Risk-Adjusted Performance

Very Weak

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

Hansol Chemica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hansol Chemica are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hansol Chemica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EBEST Investment and Hansol Chemica

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

The idea behind EBEST Investment Securities and Hansol Chemica 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.