Correlation Between Hana Materials and Aprogen KIC

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Can any of the company-specific risk be diversified away by investing in both Hana Materials and Aprogen KIC 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 Materials and Aprogen KIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Aprogen KIC, you can compare the effects of market volatilities on Hana Materials and Aprogen KIC 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 Materials with a short position of Aprogen KIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Aprogen KIC.

Diversification Opportunities for Hana Materials and Aprogen KIC

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hana and Aprogen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Aprogen KIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen KIC and Hana Materials 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 Materials are associated (or correlated) with Aprogen KIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen KIC has no effect on the direction of Hana Materials i.e., Hana Materials and Aprogen KIC go up and down completely randomly.

Pair Corralation between Hana Materials and Aprogen KIC

Assuming the 90 days trading horizon Hana Materials is expected to under-perform the Aprogen KIC. But the stock apears to be less risky and, when comparing its historical volatility, Hana Materials is 1.19 times less risky than Aprogen KIC. The stock trades about -0.31 of its potential returns per unit of risk. The Aprogen KIC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  111,500  in Aprogen KIC on August 29, 2024 and sell it today you would earn a total of  8,900  from holding Aprogen KIC or generate 7.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hana Materials  vs.  Aprogen KIC

 Performance 
       Timeline  
Hana Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hana Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Aprogen KIC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aprogen KIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Hana Materials and Aprogen KIC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hana Materials and Aprogen KIC

The main advantage of trading using opposite Hana Materials and Aprogen KIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, Aprogen KIC 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 Aprogen KIC will offset losses from the drop in Aprogen KIC's long position.
The idea behind Hana Materials and Aprogen KIC 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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