Correlation Between Daewon Media and Hana Financial

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

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

Diversification Opportunities for Daewon Media and Hana Financial

0.07

Correlation Coefficient

Daewon Media  Hana Financial

Significant diversification

The 3 months correlation between Daewon and Hana is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Daewon Media 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 Daewon Media Co 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 Daewon Media i.e., Daewon Media and Hana Financial go up and down completely randomly.

Pair Corralation between Daewon Media and Hana Financial

Assuming the 90 days trading horizon Daewon Media Co is expected to generate 0.74 times more return on investment than Hana Financial. However, Daewon Media Co is 1.36 times less risky than Hana Financial. It trades about 0.09 of its potential returns per unit of risk. Hana Financial is currently generating about -0.14 per unit of risk. If you would invest  751,000  in Daewon Media Co on September 23, 2024 and sell it today you would earn a total of  26,000  from holding Daewon Media Co or generate 3.46% return on investment over 90 days.

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

Daewon Media Co  vs.  Hana Financial

Daewon Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Daewon Media and Hana Financial

The main advantage of trading using opposite Daewon Media and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media 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 Daewon Media Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.