Correlation Between Dynasty Ceramic and Hana Microelectronics

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Can any of the company-specific risk be diversified away by investing in both Dynasty Ceramic and Hana Microelectronics 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 Dynasty Ceramic and Hana Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynasty Ceramic Public and Hana Microelectronics Public, you can compare the effects of market volatilities on Dynasty Ceramic and Hana Microelectronics 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 Dynasty Ceramic with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynasty Ceramic and Hana Microelectronics.

Diversification Opportunities for Dynasty Ceramic and Hana Microelectronics

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Dynasty and Hana is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dynasty Ceramic Public and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Dynasty Ceramic 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 Dynasty Ceramic Public are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of Dynasty Ceramic i.e., Dynasty Ceramic and Hana Microelectronics go up and down completely randomly.

Pair Corralation between Dynasty Ceramic and Hana Microelectronics

Assuming the 90 days trading horizon Dynasty Ceramic Public is expected to generate 0.59 times more return on investment than Hana Microelectronics. However, Dynasty Ceramic Public is 1.68 times less risky than Hana Microelectronics. It trades about -0.04 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about -0.05 per unit of risk. If you would invest  212.00  in Dynasty Ceramic Public on November 27, 2024 and sell it today you would lose (70.00) from holding Dynasty Ceramic Public or give up 33.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.78%
ValuesDaily Returns

Dynasty Ceramic Public  vs.  Hana Microelectronics Public

 Performance 
       Timeline  
Dynasty Ceramic Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Dynasty Ceramic Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Hana Microelectronics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hana Microelectronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dynasty Ceramic and Hana Microelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dynasty Ceramic and Hana Microelectronics

The main advantage of trading using opposite Dynasty Ceramic and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynasty Ceramic position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' long position.
The idea behind Dynasty Ceramic Public and Hana Microelectronics Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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