Correlation Between Daou Technology and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Daou Technology 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 Daou Technology and Hana Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and Hana Financial, you can compare the effects of market volatilities on Daou Technology 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 Daou Technology with a short position of Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and Hana Financial.
Diversification Opportunities for Daou Technology and Hana Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daou and Hana is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Daou Technology 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 Daou Technology 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 Daou Technology i.e., Daou Technology and Hana Financial go up and down completely randomly.
Pair Corralation between Daou Technology and Hana Financial
Assuming the 90 days trading horizon Daou Technology is expected to under-perform the Hana Financial. But the stock apears to be less risky and, when comparing its historical volatility, Daou Technology is 1.89 times less risky than Hana Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Hana Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,990,000 in Hana Financial on September 1, 2024 and sell it today you would earn a total of 250,000 from holding Hana Financial or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. Hana Financial
Performance |
| Timeline |
| Daou Technology |
| Hana Financial |
Daou Technology and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and Hana Financial
The main advantage of trading using opposite Daou Technology and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology 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.| Daou Technology vs. Kaonmedia Co | Daou Technology vs. JYP Entertainment Corp | Daou Technology vs. DC Media Co | Daou Technology vs. Raontech |
| Hana Financial vs. Daiyang Metal Co | Hana Financial vs. Seoul Broadcasting System | Hana Financial vs. KyungIn Electronics Co | Hana Financial vs. PJ Electronics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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