Correlation Between AptaBio Therapeutics and Hanwha Chemical

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

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

Diversification Opportunities for AptaBio Therapeutics and Hanwha Chemical

0.78

Correlation Coefficient

AptaBio Therapeutics  Hanwha Chemical

Poor diversification

The 3 months correlation between AptaBio and Hanwha is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp and AptaBio Therapeutics 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 AptaBio Therapeutics are associated (or correlated) with Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and Hanwha Chemical go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and Hanwha Chemical

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to generate 1.14 times less return on investment than Hanwha Chemical. In addition to that, AptaBio Therapeutics is 1.01 times more volatile than Hanwha Chemical Corp. It trades about 0.08 of its total potential returns per unit of risk. Hanwha Chemical Corp is currently generating about 0.09 per unit of volatility. If you would invest  1,612,000  in Hanwha Chemical Corp on December 30, 2024 and sell it today you would earn a total of  306,000  from holding Hanwha Chemical Corp or generate 18.98% return on investment over 90 days.

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

AptaBio Therapeutics  vs.  Hanwha Chemical Corp

AptaBio Therapeutics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AptaBio Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AptaBio Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Hanwha Chemical Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha Chemical Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanwha Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AptaBio Therapeutics and Hanwha Chemical

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

The idea behind AptaBio Therapeutics and Hanwha Chemical Corp 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.