Correlation Between Hana Financial and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Hyundai Engineering 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 Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Financial 7 and Hyundai Engineering Construction, you can compare the effects of market volatilities on Hana Financial and Hyundai Engineering 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 Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Hyundai Engineering.
Diversification Opportunities for Hana Financial and Hyundai Engineering
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hana and Hyundai is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial 7 and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering 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 7 are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of Hana Financial i.e., Hana Financial and Hyundai Engineering go up and down completely randomly.
Pair Corralation between Hana Financial and Hyundai Engineering
Assuming the 90 days trading horizon Hana Financial 7 is expected to generate 3.08 times more return on investment than Hyundai Engineering. However, Hana Financial is 3.08 times more volatile than Hyundai Engineering Construction. It trades about 0.23 of its potential returns per unit of risk. Hyundai Engineering Construction is currently generating about -0.04 per unit of risk. If you would invest 969,000 in Hana Financial 7 on September 1, 2024 and sell it today you would earn a total of 263,000 from holding Hana Financial 7 or generate 27.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hana Financial 7 vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| Hana Financial 7 |
| Hyundai Engineering |
Hana Financial and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Hyundai Engineering
The main advantage of trading using opposite Hana Financial and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| Hana Financial vs. Ananti Inc | Hana Financial vs. SS TECH | Hana Financial vs. Vieworks Co | Hana Financial vs. Shinsung Delta Tech |
| Hyundai Engineering vs. Korea New Network | Hyundai Engineering vs. ICD Co | Hyundai Engineering vs. DYPNF CoLtd | Hyundai Engineering vs. Busan 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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