Correlation Between Hanmi Semiconductor and Dream Security

Can any of the company-specific risk be diversified away by investing in both Hanmi Semiconductor and Dream Security 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 Semiconductor and Dream Security into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanmi Semiconductor Co and Dream Security co, you can compare the effects of market volatilities on Hanmi Semiconductor and Dream Security 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 Semiconductor with a short position of Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanmi Semiconductor and Dream Security.

Diversification Opportunities for Hanmi Semiconductor and Dream Security

0.42

Correlation Coefficient

Hanmi Semiconductor  Dream Security

Very weak diversification

The 3 months correlation between Hanmi and Dream is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Semiconductor Co and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co and Hanmi Semiconductor 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 Semiconductor Co are associated (or correlated) with Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of Hanmi Semiconductor i.e., Hanmi Semiconductor and Dream Security go up and down completely randomly.

Pair Corralation between Hanmi Semiconductor and Dream Security

Assuming the 90 days trading horizon Hanmi Semiconductor Co is expected to generate 1.11 times more return on investment than Dream Security. However, Hanmi Semiconductor is 1.11 times more volatile than Dream Security co. It trades about 0.14 of its potential returns per unit of risk. Dream Security co is currently generating about 0.05 per unit of risk. If you would invest  7,460,000  in Hanmi Semiconductor Co on November 29, 2024 and sell it today you would earn a total of  2,580,000  from holding Hanmi Semiconductor Co or generate 34.58% return on investment over 90 days.

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

Hanmi Semiconductor Co  vs.  Dream Security co

Hanmi Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Semiconductor Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanmi Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Dream Security co

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Security co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dream Security sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanmi Semiconductor and Dream Security

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

The idea behind Hanmi Semiconductor Co and Dream Security co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.