Correlation Between Hana Financial and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Samsung Life 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 Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Financial and Samsung Life, you can compare the effects of market volatilities on Hana Financial and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Samsung Life.
Diversification Opportunities for Hana Financial and Samsung Life
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hana and Samsung is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Hana Financial i.e., Hana Financial and Samsung Life go up and down completely randomly.
Pair Corralation between Hana Financial and Samsung Life
Assuming the 90 days trading horizon Hana Financial is expected to generate 0.46 times more return on investment than Samsung Life. However, Hana Financial is 2.19 times less risky than Samsung Life. It trades about -0.21 of its potential returns per unit of risk. Samsung Life is currently generating about -0.48 per unit of risk. If you would invest 5,900,000 in Hana Financial on October 23, 2024 and sell it today you would lose (180,000) from holding Hana Financial or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Financial vs. Samsung Life
Performance |
| Timeline |
| Hana Financial |
| Samsung Life |
Hana Financial and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Samsung Life
The main advantage of trading using opposite Hana Financial and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Hana Financial vs. Nature and Environment | Hana Financial vs. BooKook Steel Co | Hana Financial vs. CJ Seafood Corp | Hana Financial vs. Daehan Steel |
| Samsung Life vs. Guyoung Technology Co | Samsung Life vs. Dong A Steel Technology | Samsung Life vs. Daishin Information Communications | Samsung Life vs. Hanjin Transportation 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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