Correlation Between Hana Financial and Duksan Hi

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

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

Diversification Opportunities for Hana Financial and Duksan Hi

0.16

Correlation Coefficient

Hana Financial  Duksan Hi

Average diversification

The 3 months correlation between Hana and Duksan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Hana Financial i.e., Hana Financial and Duksan Hi go up and down completely randomly.

Pair Corralation between Hana Financial and Duksan Hi

Assuming the 90 days trading horizon Hana Financial is expected to generate 0.63 times more return on investment than Duksan Hi. However, Hana Financial is 1.58 times less risky than Duksan Hi. It trades about 0.06 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about -0.01 per unit of risk. If you would invest  3,740,623  in Hana Financial on December 2, 2024 and sell it today you would earn a total of  2,209,377  from holding Hana Financial or generate 59.06% return on investment over 90 days.

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

Hana Financial  vs.  Duksan Hi Metal

Hana Financial

Risk-Adjusted Performance

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.

Duksan Hi Metal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duksan Hi Metal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duksan Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Financial and Duksan Hi

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

The idea behind Hana Financial and Duksan Hi Metal 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.