Correlation Between Hana Financial and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Daou 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 Hana Financial and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Financial and Daou Technology, you can compare the effects of market volatilities on Hana Financial and Daou 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 Hana Financial with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Daou Technology.
Diversification Opportunities for Hana Financial and Daou Technology
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hana and Daou is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Hana Financial i.e., Hana Financial and Daou Technology go up and down completely randomly.
Pair Corralation between Hana Financial and Daou Technology
Assuming the 90 days trading horizon Hana Financial is expected to generate 0.8 times more return on investment than Daou Technology. However, Hana Financial is 1.25 times less risky than Daou Technology. It trades about 0.3 of its potential returns per unit of risk. Daou Technology is currently generating about 0.01 per unit of risk. If you would invest 5,680,000 in Hana Financial on October 29, 2024 and sell it today you would earn a total of 240,000 from holding Hana Financial or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Financial vs. Daou Technology
Performance |
| Timeline |
| Hana Financial |
| Daou Technology |
Hana Financial and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Daou Technology
The main advantage of trading using opposite Hana Financial and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Daou 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Hana Financial vs. Dongbang Transport Logistics | Hana Financial vs. Seoyon Topmetal Co | Hana Financial vs. Inzi Display CoLtd | Hana Financial vs. Asiana Airlines |
| Daou Technology vs. Lee Ku Industrial | Daou Technology vs. Lake Materials Co | Daou Technology vs. Ssangyong Materials Corp | Daou Technology vs. LS Materials |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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