Correlation Between Handok Clean and AeroSpace Technology

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

By analyzing existing cross correlation between Handok Clean Tech and AeroSpace Technology of, you can compare the effects of market volatilities on Handok Clean and AeroSpace Technology 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 Handok Clean with a short position of AeroSpace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Handok Clean and AeroSpace Technology.

Diversification Opportunities for Handok Clean and AeroSpace Technology

0.89

Correlation Coefficient

Handok Clean  AeroSpace Technology

Very poor diversification

The 3 months correlation between Handok and AeroSpace is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Handok Clean Tech and AeroSpace Technology of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroSpace Technology and Handok Clean 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 Handok Clean Tech are associated (or correlated) with AeroSpace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroSpace Technology has no effect on the direction of Handok Clean i.e., Handok Clean and AeroSpace Technology go up and down completely randomly.

Pair Corralation between Handok Clean and AeroSpace Technology

Assuming the 90 days trading horizon Handok Clean Tech is expected to generate 0.79 times more return on investment than AeroSpace Technology. However, Handok Clean Tech is 1.26 times less risky than AeroSpace Technology. It trades about -0.1 of its potential returns per unit of risk. AeroSpace Technology of is currently generating about -0.14 per unit of risk. If you would invest  688,502  in Handok Clean Tech on October 9, 2024 and sell it today you would lose (58,502) from holding Handok Clean Tech or give up 8.5% of portfolio value over 90 days.

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

Handok Clean Tech  vs.  AeroSpace Technology of

Handok Clean Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Handok Clean Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AeroSpace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AeroSpace Technology of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Handok Clean and AeroSpace Technology

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

The idea behind Handok Clean Tech and AeroSpace Technology of 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.