Correlation Between Hana Technology and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both Hana Technology and Solus Advanced 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 Technology and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Technology Co and Solus Advanced Materials, you can compare the effects of market volatilities on Hana Technology and Solus Advanced 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 Technology with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Technology and Solus Advanced.
Diversification Opportunities for Hana Technology and Solus Advanced
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hana and Solus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hana Technology Co and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and Hana Technology 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 Technology Co are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of Hana Technology i.e., Hana Technology and Solus Advanced go up and down completely randomly.
Pair Corralation between Hana Technology and Solus Advanced
Assuming the 90 days trading horizon Hana Technology Co is expected to generate 1.81 times more return on investment than Solus Advanced. However, Hana Technology is 1.81 times more volatile than Solus Advanced Materials. It trades about -0.31 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about -0.63 per unit of risk. If you would invest 2,835,000 in Hana Technology Co on September 1, 2024 and sell it today you would lose (780,000) from holding Hana Technology Co or give up 27.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hana Technology Co vs. Solus Advanced Materials
Performance |
| Timeline |
| Hana Technology |
| Solus Advanced Materials |
Hana Technology and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hana Technology and Solus Advanced
The main advantage of trading using opposite Hana Technology and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Technology position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| Hana Technology vs. COWINTECH Co | Hana Technology vs. Young Poong Precision | Hana Technology vs. Seoam Machinery Industry | Hana Technology vs. Haisung TPC Co |
| Solus Advanced vs. Daishin Information Communications | Solus Advanced vs. Tway Air Co | Solus Advanced vs. Korea Computer | Solus Advanced vs. Iljin Display |
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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