Correlation Between Hana Financial and Samsung Life

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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 Insurance, 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

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hana and Samsung is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance 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 Insurance 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 0.3 times more return on investment than Samsung Life. However, Hana Financial is 3.37 times less risky than Samsung Life. It trades about 0.31 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about -0.06 per unit of risk. If you would invest  5,780,000  in Hana Financial on November 6, 2024 and sell it today you would earn a total of  270,000  from holding Hana Financial or generate 4.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hana Financial  vs.  Samsung Life Insurance

 Performance 
       Timeline  
Hana Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hana Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hana Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Samsung Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Samsung Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.
The idea behind Hana Financial and Samsung Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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