Correlation Between Hwang Chang and Radium Life

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

By analyzing existing cross correlation between Hwang Chang General and Radium Life Tech, you can compare the effects of market volatilities on Hwang Chang and Radium Life 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 Hwang Chang with a short position of Radium Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwang Chang and Radium Life.

Diversification Opportunities for Hwang Chang and Radium Life

0.3

Correlation Coefficient

Hwang Chang  Radium Life

Weak diversification

The 3 months correlation between Hwang and Radium is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hwang Chang General and Radium Life Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radium Life Tech and Hwang Chang 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 Hwang Chang General are associated (or correlated) with Radium Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radium Life Tech has no effect on the direction of Hwang Chang i.e., Hwang Chang and Radium Life go up and down completely randomly.

Pair Corralation between Hwang Chang and Radium Life

Assuming the 90 days trading horizon Hwang Chang General is expected to generate 2.31 times more return on investment than Radium Life. However, Hwang Chang is 2.31 times more volatile than Radium Life Tech. It trades about 0.13 of its potential returns per unit of risk. Radium Life Tech is currently generating about 0.22 per unit of risk. If you would invest  7,380  in Hwang Chang General on December 22, 2024 and sell it today you would earn a total of  2,180  from holding Hwang Chang General or generate 29.54% return on investment over 90 days.

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

Hwang Chang General  vs.  Radium Life Tech

Hwang Chang General

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hwang Chang General are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hwang Chang showed solid returns over the last few months and may actually be approaching a breakup point.

Radium Life Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Radium Life Tech are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Radium Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hwang Chang and Radium Life

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

The idea behind Hwang Chang General and Radium Life Tech 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.