Correlation Between Green Cross and Hanwha Solutions
Can any of the company-specific risk be diversified away by investing in both Green Cross and Hanwha Solutions 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 Green Cross and Hanwha Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and Hanwha Solutions, you can compare the effects of market volatilities on Green Cross and Hanwha Solutions 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 Green Cross with a short position of Hanwha Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and Hanwha Solutions.
Diversification Opportunities for Green Cross and Hanwha Solutions
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Green and Hanwha is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical and Hanwha Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Solutions and Green Cross 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 Green Cross Medical are associated (or correlated) with Hanwha Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Solutions has no effect on the direction of Green Cross i.e., Green Cross and Hanwha Solutions go up and down completely randomly.
Pair Corralation between Green Cross and Hanwha Solutions
Assuming the 90 days trading horizon Green Cross Medical is expected to generate 0.99 times more return on investment than Hanwha Solutions. However, Green Cross Medical is 1.01 times less risky than Hanwha Solutions. It trades about -0.02 of its potential returns per unit of risk. Hanwha Solutions is currently generating about -0.05 per unit of risk. If you would invest 588,000 in Green Cross Medical on September 13, 2024 and sell it today you would lose (238,500) from holding Green Cross Medical or give up 40.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Green Cross Medical vs. Hanwha Solutions
Performance |
Timeline |
Green Cross Medical |
Hanwha Solutions |
Green Cross and Hanwha Solutions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Green Cross and Hanwha Solutions
The main advantage of trading using opposite Green Cross and Hanwha Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, Hanwha Solutions 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 Solutions will offset losses from the drop in Hanwha Solutions' long position.Green Cross vs. Samsung Electronics Co | Green Cross vs. Samsung Electronics Co | Green Cross vs. SK Hynix | Green Cross vs. SK Holdings Co |
Hanwha Solutions vs. LG Chemicals | Hanwha Solutions vs. POSCO Holdings | Hanwha Solutions vs. Lotte Chemical Corp | Hanwha Solutions vs. Hyundai Steel |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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