Correlation Between Hana Materials and Air Busan
Can any of the company-specific risk be diversified away by investing in both Hana Materials and Air Busan 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 Air Busan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Air Busan Co, you can compare the effects of market volatilities on Hana Materials and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Air Busan.
Diversification Opportunities for Hana Materials and Air Busan
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hana and Air is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Hana Materials i.e., Hana Materials and Air Busan go up and down completely randomly.
Pair Corralation between Hana Materials and Air Busan
Assuming the 90 days trading horizon Hana Materials is expected to generate 1.43 times more return on investment than Air Busan. However, Hana Materials is 1.43 times more volatile than Air Busan Co. It trades about -0.01 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.04 per unit of risk. If you would invest 4,594,442 in Hana Materials on November 27, 2024 and sell it today you would lose (1,294,442) from holding Hana Materials or give up 28.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Materials vs. Air Busan Co
Performance |
| Timeline |
| Hana Materials |
| Air Busan |
Hana Materials and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Materials and Air Busan
The main advantage of trading using opposite Hana Materials and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Hana Materials vs. Dongkuk Structures Construction | Hana Materials vs. KCC Engineering Construction | Hana Materials vs. Dongwoo Farm To | Hana Materials vs. Woorim Machinery Co |
| Air Busan vs. Formetal Co | Air Busan vs. Industrial Bank | Air Busan vs. Sungmoon Electronics Co | Air Busan vs. Hyundai Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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