Correlation Between Hana Financial and Korea Refractories

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

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

Diversification Opportunities for Hana Financial and Korea Refractories

-0.42

Correlation Coefficient

Hana Financial  Korea Refractories

Very good diversification

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

Pair Corralation between Hana Financial and Korea Refractories

Assuming the 90 days trading horizon Hana Financial is expected to generate 1.35 times more return on investment than Korea Refractories. However, Hana Financial is 1.35 times more volatile than Korea Refractories Co. It trades about 0.11 of its potential returns per unit of risk. Korea Refractories Co is currently generating about 0.03 per unit of risk. If you would invest  5,730,080  in Hana Financial on December 22, 2024 and sell it today you would earn a total of  489,920  from holding Hana Financial or generate 8.55% return on investment over 90 days.

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

Hana Financial  vs.  Korea Refractories Co

Hana Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hana Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Korea Refractories

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Refractories Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Refractories is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hana Financial and Korea Refractories

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

The idea behind Hana Financial and Korea Refractories 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.