Correlation Between Hana Materials and CG Hi
Can any of the company-specific risk be diversified away by investing in both Hana Materials and CG Hi 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 CG Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and CG Hi Tech, you can compare the effects of market volatilities on Hana Materials and CG Hi 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 CG Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and CG Hi.
Diversification Opportunities for Hana Materials and CG Hi
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hana and 264660 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and CG Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CG Hi Tech 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 CG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CG Hi Tech has no effect on the direction of Hana Materials i.e., Hana Materials and CG Hi go up and down completely randomly.
Pair Corralation between Hana Materials and CG Hi
Assuming the 90 days trading horizon Hana Materials is expected to under-perform the CG Hi. But the stock apears to be less risky and, when comparing its historical volatility, Hana Materials is 1.08 times less risky than CG Hi. The stock trades about -0.48 of its potential returns per unit of risk. The CG Hi Tech is currently generating about -0.4 of returns per unit of risk over similar time horizon. If you would invest 1,254,000 in CG Hi Tech on September 1, 2024 and sell it today you would lose (266,000) from holding CG Hi Tech or give up 21.21% 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. CG Hi Tech
Performance |
| Timeline |
| Hana Materials |
| CG Hi Tech |
Hana Materials and CG Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and CG Hi
The main advantage of trading using opposite Hana Materials and CG Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, CG Hi 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 CG Hi will offset losses from the drop in CG Hi's long position.| Hana Materials vs. SK Hynix | Hana Materials vs. LX Semicon Co | Hana Materials vs. Tokai Carbon Korea | Hana Materials vs. People Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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