Correlation Between WONIK Materials and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and Hanshin Construction 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 WONIK Materials and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WONIK Materials CoLtd and Hanshin Construction Co, you can compare the effects of market volatilities on WONIK Materials and Hanshin Construction 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 WONIK Materials with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and Hanshin Construction.
Diversification Opportunities for WONIK Materials and Hanshin Construction
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between WONIK and Hanshin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and WONIK Materials 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 WONIK Materials CoLtd are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of WONIK Materials i.e., WONIK Materials and Hanshin Construction go up and down completely randomly.
Pair Corralation between WONIK Materials and Hanshin Construction
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to generate 2.32 times more return on investment than Hanshin Construction. However, WONIK Materials is 2.32 times more volatile than Hanshin Construction Co. It trades about 0.07 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.09 per unit of risk. If you would invest 1,846,000 in WONIK Materials CoLtd on December 5, 2024 and sell it today you would earn a total of 129,000 from holding WONIK Materials CoLtd or generate 6.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
WONIK Materials CoLtd vs. Hanshin Construction Co
Performance |
Timeline |
WONIK Materials CoLtd |
Hanshin Construction |
WONIK Materials and Hanshin Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WONIK Materials and Hanshin Construction
The main advantage of trading using opposite WONIK Materials and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.WONIK Materials vs. Soulbrain Holdings Co | WONIK Materials vs. Wonik Ips Co | WONIK Materials vs. TES Co | WONIK Materials vs. Suprema |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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