Correlation Between Hana Financial and Daol Investment

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

By analyzing existing cross correlation between Hana Financial and Daol Investment Securities, you can compare the effects of market volatilities on Hana Financial and Daol Investment 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 Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Daol Investment.

Diversification Opportunities for Hana Financial and Daol Investment

-0.12

Correlation Coefficient

Hana Financial  Daol Investment

Good diversification

The 3 months correlation between Hana and Daol is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu 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 Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Hana Financial i.e., Hana Financial and Daol Investment go up and down completely randomly.

Pair Corralation between Hana Financial and Daol Investment

Assuming the 90 days trading horizon Hana Financial is expected to generate 0.72 times more return on investment than Daol Investment. However, Hana Financial is 1.38 times less risky than Daol Investment. It trades about 0.03 of its potential returns per unit of risk. Daol Investment Securities is currently generating about 0.02 per unit of risk. If you would invest  4,582,169  in Hana Financial on October 10, 2024 and sell it today you would earn a total of  1,187,831  from holding Hana Financial or generate 25.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Hana Financial  vs.  Daol Investment Securities

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.

Daol Investment Secu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daol Investment Securities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daol Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hana Financial and Daol Investment

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

The idea behind Hana Financial and Daol Investment Securities 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.