Correlation Between Hana Financial and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Hana Financial and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on Hana Financial and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Korean Drug.
Diversification Opportunities for Hana Financial and Korean Drug
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hana and Korean is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial 7 and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Hana Financial i.e., Hana Financial and Korean Drug go up and down completely randomly.
Pair Corralation between Hana Financial and Korean Drug
Assuming the 90 days trading horizon Hana Financial 7 is expected to under-perform the Korean Drug. In addition to that, Hana Financial is 1.85 times more volatile than Korean Drug Co. It trades about -0.03 of its total potential returns per unit of risk. Korean Drug Co is currently generating about -0.04 per unit of volatility. If you would invest 616,000 in Korean Drug Co on September 12, 2024 and sell it today you would lose (187,000) from holding Korean Drug Co or give up 30.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hana Financial 7 vs. Korean Drug Co
Performance |
| Timeline |
| Hana Financial 7 |
| Korean Drug |
Hana Financial and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Financial and Korean Drug
The main advantage of trading using opposite Hana Financial and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Financial position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Hana Financial vs. Ananti Inc | Hana Financial vs. SS TECH | Hana Financial vs. Vieworks Co | Hana Financial vs. Shinsung Delta Tech |
| Korean Drug vs. Kolon Life Science | Korean Drug vs. JETEMA Co | Korean Drug vs. Aminologics CoLtd | Korean Drug vs. Daihan Pharmaceutical CoLtd |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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