Correlation Between Samsung Fire and Hana Financial

Can any of the company-specific risk be diversified away by investing in both Samsung Fire and Hana Financial 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 Samsung Fire and Hana Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Fire Marine and Hana Financial, you can compare the effects of market volatilities on Samsung Fire and Hana Financial 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 Samsung Fire with a short position of Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Fire and Hana Financial.

Diversification Opportunities for Samsung Fire and Hana Financial

0.13

Correlation Coefficient

Samsung Fire  Hana Financial

Average diversification

The 3 months correlation between Samsung and Hana is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Fire Marine and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Samsung Fire 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 Samsung Fire Marine are associated (or correlated) with Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Samsung Fire i.e., Samsung Fire and Hana Financial go up and down completely randomly.

Pair Corralation between Samsung Fire and Hana Financial

Assuming the 90 days trading horizon Samsung Fire Marine is expected to generate 1.11 times more return on investment than Hana Financial. However, Samsung Fire is 1.11 times more volatile than Hana Financial. It trades about 0.07 of its potential returns per unit of risk. Hana Financial is currently generating about 0.03 per unit of risk. If you would invest  19,327,500  in Samsung Fire Marine on October 9, 2024 and sell it today you would earn a total of  17,172,500  from holding Samsung Fire Marine or generate 88.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samsung Fire Marine  vs.  Hana Financial

Samsung Fire Marine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Fire Marine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Fire may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hana Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hana Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hana Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Fire and Hana Financial

The main advantage of trading using opposite Samsung Fire and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Fire position performs unexpectedly, Hana Financial 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 Financial will offset losses from the drop in Hana Financial's long position.

The idea behind Samsung Fire Marine and Hana Financial 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.