Correlation Between Lindeman Asia and Hanwha InvestmentSecuri

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

By analyzing existing cross correlation between Lindeman Asia Investment and Hanwha InvestmentSecurities Co, you can compare the effects of market volatilities on Lindeman Asia and Hanwha InvestmentSecuri 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 Lindeman Asia with a short position of Hanwha InvestmentSecuri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and Hanwha InvestmentSecuri.

Diversification Opportunities for Lindeman Asia and Hanwha InvestmentSecuri

-0.49

Correlation Coefficient

Lindeman Asia  Hanwha InvestmentSecuri

Very good diversification

The 3 months correlation between Lindeman and Hanwha is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and Hanwha InvestmentSecurities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha InvestmentSecuri and Lindeman Asia 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 Lindeman Asia Investment are associated (or correlated) with Hanwha InvestmentSecuri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha InvestmentSecuri has no effect on the direction of Lindeman Asia i.e., Lindeman Asia and Hanwha InvestmentSecuri go up and down completely randomly.

Pair Corralation between Lindeman Asia and Hanwha InvestmentSecuri

Assuming the 90 days trading horizon Lindeman Asia Investment is expected to generate 1.7 times more return on investment than Hanwha InvestmentSecuri. However, Lindeman Asia is 1.7 times more volatile than Hanwha InvestmentSecurities Co. It trades about 0.13 of its potential returns per unit of risk. Hanwha InvestmentSecurities Co is currently generating about -0.06 per unit of risk. If you would invest  342,000  in Lindeman Asia Investment on November 29, 2024 and sell it today you would earn a total of  139,000  from holding Lindeman Asia Investment or generate 40.64% return on investment over 90 days.

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

Lindeman Asia Investment  vs.  Hanwha InvestmentSecurities Co

Lindeman Asia Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindeman Asia Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lindeman Asia sustained solid returns over the last few months and may actually be approaching a breakup point.

Hanwha InvestmentSecuri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanwha InvestmentSecurities Co 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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lindeman Asia and Hanwha InvestmentSecuri

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

The idea behind Lindeman Asia Investment and Hanwha InvestmentSecurities 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.