Correlation Between Hana Financial and Samsung Life

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

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

Diversification Opportunities for Hana Financial and Samsung Life

-0.4

Correlation Coefficient

Hana Financial  Samsung Life

Very good diversification

The 3 months correlation between Hana and Samsung is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Hana Financial i.e., Hana Financial and Samsung Life go up and down completely randomly.

Pair Corralation between Hana Financial and Samsung Life

Assuming the 90 days trading horizon Hana Financial is expected to generate 0.51 times more return on investment than Samsung Life. However, Hana Financial is 1.94 times less risky than Samsung Life. It trades about 0.14 of its potential returns per unit of risk. Samsung Life is currently generating about -0.06 per unit of risk. If you would invest  5,516,416  in Hana Financial on December 29, 2024 and sell it today you would earn a total of  613,584  from holding Hana Financial or generate 11.12% 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.  Samsung Life

Hana Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial are ranked lower than 11 (%) 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.

Samsung Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hana Financial and Samsung Life

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

The idea behind Hana Financial and Samsung Life 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.