Correlation Between Hanwha Life and AptaBio Therapeutics

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

By analyzing existing cross correlation between Hanwha Life Insurance and AptaBio Therapeutics, you can compare the effects of market volatilities on Hanwha Life and AptaBio Therapeutics 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 Hanwha Life with a short position of AptaBio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Life and AptaBio Therapeutics.

Diversification Opportunities for Hanwha Life and AptaBio Therapeutics

0.56

Correlation Coefficient

Hanwha Life  AptaBio Therapeutics

Very weak diversification

The 3 months correlation between Hanwha and AptaBio is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Life Insurance and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics and Hanwha Life 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 Hanwha Life Insurance are associated (or correlated) with AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of Hanwha Life i.e., Hanwha Life and AptaBio Therapeutics go up and down completely randomly.

Pair Corralation between Hanwha Life and AptaBio Therapeutics

Assuming the 90 days trading horizon Hanwha Life is expected to generate 5.73 times less return on investment than AptaBio Therapeutics. But when comparing it to its historical volatility, Hanwha Life Insurance is 1.96 times less risky than AptaBio Therapeutics. It trades about 0.03 of its potential returns per unit of risk. AptaBio Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  630,000  in AptaBio Therapeutics on December 24, 2024 and sell it today you would earn a total of  97,000  from holding AptaBio Therapeutics or generate 15.4% return on investment over 90 days.

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

Hanwha Life Insurance  vs.  AptaBio Therapeutics

Hanwha Life Insurance

Risk-Adjusted Performance

Weak

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

AptaBio Therapeutics

Risk-Adjusted Performance

Modest

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

Pair Trading with Hanwha Life and AptaBio Therapeutics

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

The idea behind Hanwha Life Insurance and AptaBio Therapeutics 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.