Correlation Between Korean Reinsurance and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Hana Financial 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 Korean Reinsurance and Hana Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Hana Financial, you can compare the effects of market volatilities on Korean Reinsurance and Hana Financial 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 Korean Reinsurance with a short position of Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Hana Financial.
Diversification Opportunities for Korean Reinsurance and Hana Financial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korean and Hana is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Hana Financial go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Hana Financial
Assuming the 90 days trading horizon Korean Reinsurance Co is expected to generate 0.78 times more return on investment than Hana Financial. However, Korean Reinsurance Co is 1.29 times less risky than Hana Financial. It trades about 0.07 of its potential returns per unit of risk. Hana Financial is currently generating about 0.03 per unit of risk. If you would invest 799,000 in Korean Reinsurance Co on October 11, 2024 and sell it today you would earn a total of 13,000 from holding Korean Reinsurance Co or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Hana Financial
Performance |
| Timeline |
| Korean Reinsurance |
| Hana Financial |
Korean Reinsurance and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Hana Financial
The main advantage of trading using opposite Korean Reinsurance and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's long position.| Korean Reinsurance vs. Alton Sports CoLtd | Korean Reinsurance vs. TJ media Co | Korean Reinsurance vs. Digital Multimedia Technology | Korean Reinsurance vs. MEDIANA CoLtd |
| Hana Financial vs. PI Advanced Materials | Hana Financial vs. Seohee Construction Co | Hana Financial vs. INNOX Advanced Materials | Hana Financial vs. Woorim Machinery Co |
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.
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