Correlation Between Wemade CoLtd and HANA Micron

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

By analyzing existing cross correlation between Wemade CoLtd and HANA Micron, you can compare the effects of market volatilities on Wemade CoLtd and HANA Micron 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 Wemade CoLtd with a short position of HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wemade CoLtd and HANA Micron.

Diversification Opportunities for Wemade CoLtd and HANA Micron

-0.08

Correlation Coefficient

Wemade CoLtd  HANA Micron

Good diversification

The 3 months correlation between Wemade and HANA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wemade CoLtd and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron and Wemade CoLtd 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 Wemade CoLtd are associated (or correlated) with HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Wemade CoLtd i.e., Wemade CoLtd and HANA Micron go up and down completely randomly.

Pair Corralation between Wemade CoLtd and HANA Micron

Assuming the 90 days trading horizon Wemade CoLtd is expected to under-perform the HANA Micron. But the stock apears to be less risky and, when comparing its historical volatility, Wemade CoLtd is 1.47 times less risky than HANA Micron. The stock trades about -0.08 of its potential returns per unit of risk. The HANA Micron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  914,000  in HANA Micron on December 2, 2024 and sell it today you would earn a total of  181,000  from holding HANA Micron or generate 19.8% return on investment over 90 days.

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

Wemade CoLtd  vs.  HANA Micron

Wemade CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wemade CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HANA Micron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HANA Micron are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HANA Micron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wemade CoLtd and HANA Micron

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

The idea behind Wemade CoLtd and HANA Micron 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..