Correlation Between Asia Technology and Hana Technology
Can any of the company-specific risk be diversified away by investing in both Asia Technology and Hana Technology 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 Asia Technology and Hana Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Technology Co and Hana Technology Co, you can compare the effects of market volatilities on Asia Technology and Hana Technology 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 Asia Technology with a short position of Hana Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Technology and Hana Technology.
Diversification Opportunities for Asia Technology and Hana Technology
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Asia and Hana is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Asia Technology Co and Hana Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Technology and Asia 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 Asia Technology Co are associated (or correlated) with Hana Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Technology has no effect on the direction of Asia Technology i.e., Asia Technology and Hana Technology go up and down completely randomly.
Pair Corralation between Asia Technology and Hana Technology
Assuming the 90 days trading horizon Asia Technology Co is expected to generate 0.5 times more return on investment than Hana Technology. However, Asia Technology Co is 2.0 times less risky than Hana Technology. It trades about 0.0 of its potential returns per unit of risk. Hana Technology Co is currently generating about -0.04 per unit of risk. If you would invest 247,985 in Asia Technology Co on August 28, 2024 and sell it today you would lose (27,985) from holding Asia Technology Co or give up 11.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Technology Co vs. Hana Technology Co
Performance |
| Timeline |
| Asia Technology |
| Hana Technology |
Asia Technology and Hana Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Technology and Hana Technology
The main advantage of trading using opposite Asia Technology and Hana Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Technology position performs unexpectedly, Hana Technology 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 Technology will offset losses from the drop in Hana Technology's long position.| Asia Technology vs. Lotte Data Communication | Asia Technology vs. Eugene Technology CoLtd | Asia Technology vs. Daishin Information Communications | Asia Technology vs. Guyoung Technology Co |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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