Correlation Between Hana Financial and Ecoplastic

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

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

Diversification Opportunities for Hana Financial and Ecoplastic

0.52

Correlation Coefficient

Hana Financial  Ecoplastic

Very weak diversification

The 3 months correlation between Hana and Ecoplastic is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Hana Financial i.e., Hana Financial and Ecoplastic go up and down completely randomly.

Pair Corralation between Hana Financial and Ecoplastic

Assuming the 90 days trading horizon Hana Financial is expected to generate 1.56 times less return on investment than Ecoplastic. But when comparing it to its historical volatility, Hana Financial is 1.46 times less risky than Ecoplastic. It trades about 0.13 of its potential returns per unit of risk. Ecoplastic is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  229,000  in Ecoplastic on December 26, 2024 and sell it today you would earn a total of  38,000  from holding Ecoplastic or generate 16.59% return on investment over 90 days.

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

Hana Financial  vs.  Ecoplastic

Hana Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial are ranked lower than 10 (%) 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.

Ecoplastic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecoplastic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ecoplastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Financial and Ecoplastic

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

The idea behind Hana Financial and Ecoplastic 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.