Correlation Between Hanmi Financial and Hope Bancorp
Can any of the company-specific risk be diversified away by investing in both Hanmi Financial and Hope Bancorp 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 Hanmi Financial and Hope Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanmi Financial and Hope Bancorp, you can compare the effects of market volatilities on Hanmi Financial and Hope Bancorp 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 Hanmi Financial with a short position of Hope Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanmi Financial and Hope Bancorp.
Diversification Opportunities for Hanmi Financial and Hope Bancorp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanmi and Hope is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and Hope Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope Bancorp and Hanmi 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 Hanmi Financial are associated (or correlated) with Hope Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Bancorp has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and Hope Bancorp go up and down completely randomly.
Pair Corralation between Hanmi Financial and Hope Bancorp
Given the investment horizon of 90 days Hanmi Financial is expected to generate 1.04 times more return on investment than Hope Bancorp. However, Hanmi Financial is 1.04 times more volatile than Hope Bancorp. It trades about 0.07 of its potential returns per unit of risk. Hope Bancorp is currently generating about 0.07 per unit of risk. If you would invest 1,541 in Hanmi Financial on August 31, 2024 and sell it today you would earn a total of 1,104 from holding Hanmi Financial or generate 71.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanmi Financial vs. Hope Bancorp
Performance |
| Timeline |
| Hanmi Financial |
| Hope Bancorp |
Hanmi Financial and Hope Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanmi Financial and Hope Bancorp
The main advantage of trading using opposite Hanmi Financial and Hope Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanmi Financial position performs unexpectedly, Hope Bancorp 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 Hope Bancorp will offset losses from the drop in Hope Bancorp's long position.| Hanmi Financial vs. OP Bancorp | Hanmi Financial vs. PCB Bancorp | Hanmi Financial vs. Heritage Commerce Corp | Hanmi Financial vs. Riverview Bancorp |
| Hope Bancorp vs. OP Bancorp | Hope Bancorp vs. PCB Bancorp | Hope Bancorp vs. Financial Institutions | Hope Bancorp vs. LINKBANCORP |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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