Correlation Between Hyosung Advanced and Pan Entertainment

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

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

Diversification Opportunities for Hyosung Advanced and Pan Entertainment

0.58

Correlation Coefficient

Hyosung Advanced  Pan Entertainment

Very weak diversification

The 3 months correlation between Hyosung and Pan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Pan Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Entertainment and Hyosung Advanced 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 Hyosung Advanced Materials are associated (or correlated) with Pan Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Entertainment has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Pan Entertainment go up and down completely randomly.

Pair Corralation between Hyosung Advanced and Pan Entertainment

Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to generate 1.06 times more return on investment than Pan Entertainment. However, Hyosung Advanced is 1.06 times more volatile than Pan Entertainment Co. It trades about 0.06 of its potential returns per unit of risk. Pan Entertainment Co is currently generating about -0.12 per unit of risk. If you would invest  16,880,000  in Hyosung Advanced Materials on September 30, 2024 and sell it today you would earn a total of  580,000  from holding Hyosung Advanced Materials or generate 3.44% return on investment over 90 days.

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

Hyosung Advanced Materials  vs.  Pan Entertainment Co

Hyosung Advanced Mat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyosung Advanced Materials 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pan Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hyosung Advanced and Pan Entertainment

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

The idea behind Hyosung Advanced Materials and Pan Entertainment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.