Correlation Between DSC Investment and Hanwha Aerospace
Can any of the company-specific risk be diversified away by investing in both DSC Investment and Hanwha Aerospace 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 DSC Investment and Hanwha Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Hanwha Aerospace Co, you can compare the effects of market volatilities on DSC Investment and Hanwha Aerospace 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 DSC Investment with a short position of Hanwha Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Hanwha Aerospace.
Diversification Opportunities for DSC Investment and Hanwha Aerospace
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DSC and Hanwha is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and Hanwha Aerospace Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Aerospace and DSC 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 DSC Investment are associated (or correlated) with Hanwha Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Aerospace has no effect on the direction of DSC Investment i.e., DSC Investment and Hanwha Aerospace go up and down completely randomly.
Pair Corralation between DSC Investment and Hanwha Aerospace
Assuming the 90 days trading horizon DSC Investment is expected to generate 1.38 times less return on investment than Hanwha Aerospace. In addition to that, DSC Investment is 1.28 times more volatile than Hanwha Aerospace Co. It trades about 0.13 of its total potential returns per unit of risk. Hanwha Aerospace Co is currently generating about 0.23 per unit of volatility. If you would invest 32,650,000 in Hanwha Aerospace Co on December 30, 2024 and sell it today you would earn a total of 30,350,000 from holding Hanwha Aerospace Co or generate 92.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
DSC Investment vs. Hanwha Aerospace Co
Performance |
Timeline |
DSC Investment |
Hanwha Aerospace |
DSC Investment and Hanwha Aerospace Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DSC Investment and Hanwha Aerospace
The main advantage of trading using opposite DSC Investment and Hanwha Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment position performs unexpectedly, Hanwha Aerospace 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 Aerospace will offset losses from the drop in Hanwha Aerospace's long position.DSC Investment vs. Jeong Moon Information | DSC Investment vs. Lotte Data Communication | DSC Investment vs. Insung Information Co | DSC Investment vs. BGF Retail 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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