Correlation Between Hana Financial and Dongwon System
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Dongwon System 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 Hana Financial and Dongwon System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Financial and Dongwon System, you can compare the effects of market volatilities on Hana Financial and Dongwon System 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 Hana Financial with a short position of Dongwon System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Dongwon System.
Diversification Opportunities for Hana Financial and Dongwon System
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hana and Dongwon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and Hana Financial 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 Hana Financial are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of Hana Financial i.e., Hana Financial and Dongwon System go up and down completely randomly.
Pair Corralation between Hana Financial and Dongwon System
Assuming the 90 days trading horizon Hana Financial is expected to generate 0.69 times more return on investment than Dongwon System. However, Hana Financial is 1.46 times less risky than Dongwon System. It trades about 0.04 of its potential returns per unit of risk. Dongwon System is currently generating about 0.02 per unit of risk. If you would invest 4,234,898 in Hana Financial on September 26, 2024 and sell it today you would earn a total of 1,655,102 from holding Hana Financial or generate 39.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Financial vs. Dongwon System
Performance |
| Timeline |
| Hana Financial |
| Dongwon System |
Hana Financial and Dongwon System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Dongwon System
The main advantage of trading using opposite Hana Financial and Dongwon System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Dongwon System 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 Dongwon System will offset losses from the drop in Dongwon System's long position.| Hana Financial vs. KB Financial Group | Hana Financial vs. Shinhan Financial Group | Hana Financial vs. Hyundai Motor | Hana Financial vs. Hyundai Motor Co |
| Dongwon System vs. BNK Financial Group | Dongwon System vs. Shinhan Financial Group | Dongwon System vs. Hana Financial | Dongwon System vs. Top Material 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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