Correlation Between Hana Materials and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both Hana Materials and ABCO Electronics 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 ABCO Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and ABCO Electronics Co, you can compare the effects of market volatilities on Hana Materials and ABCO Electronics 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 ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and ABCO Electronics.
Diversification Opportunities for Hana Materials and ABCO Electronics
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hana and ABCO is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics 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 ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of Hana Materials i.e., Hana Materials and ABCO Electronics go up and down completely randomly.
Pair Corralation between Hana Materials and ABCO Electronics
Assuming the 90 days trading horizon Hana Materials is expected to generate 0.94 times more return on investment than ABCO Electronics. However, Hana Materials is 1.06 times less risky than ABCO Electronics. It trades about -0.01 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 3,908,159 in Hana Materials on October 14, 2024 and sell it today you would lose (1,278,159) from holding Hana Materials or give up 32.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Materials vs. ABCO Electronics Co
Performance |
| Timeline |
| Hana Materials |
| ABCO Electronics |
Hana Materials and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and ABCO Electronics
The main advantage of trading using opposite Hana Materials and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| Hana Materials vs. Daishin Information Communications | Hana Materials vs. Keyang Electric Machinery | Hana Materials vs. Woorim Machinery Co | Hana Materials vs. Camus Engineering Construction |
| ABCO Electronics vs. Kolon Plastics | ABCO Electronics vs. Lotte Chilsung Beverage | ABCO Electronics vs. PI Advanced Materials | ABCO Electronics vs. Hana 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 CEOs Directory module to screen CEOs from public companies around the world.
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