Correlation Between InnoTherapy and Hansol Chemical

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

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

Diversification Opportunities for InnoTherapy and Hansol Chemical

-0.59

Correlation Coefficient

InnoTherapy  Hansol Chemical

Excellent diversification

The 3 months correlation between InnoTherapy and Hansol is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding InnoTherapy and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical and InnoTherapy 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 InnoTherapy are associated (or correlated) with Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of InnoTherapy i.e., InnoTherapy and Hansol Chemical go up and down completely randomly.

Pair Corralation between InnoTherapy and Hansol Chemical

Assuming the 90 days trading horizon InnoTherapy is expected to under-perform the Hansol Chemical. But the stock apears to be less risky and, when comparing its historical volatility, InnoTherapy is 1.6 times less risky than Hansol Chemical. The stock trades about -0.03 of its potential returns per unit of risk. The Hansol Chemical Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  9,484,511  in Hansol Chemical Co on December 27, 2024 and sell it today you would earn a total of  3,335,489  from holding Hansol Chemical Co or generate 35.17% return on investment over 90 days.

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

InnoTherapy  vs.  Hansol Chemical Co

InnoTherapy

Risk-Adjusted Performance

Very Weak

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

Hansol Chemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hansol Chemical Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hansol Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InnoTherapy and Hansol Chemical

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

The idea behind InnoTherapy and Hansol Chemical Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.