Correlation Between Hana Materials and Fantagio Corp
Can any of the company-specific risk be diversified away by investing in both Hana Materials and Fantagio Corp 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 Materials and Fantagio Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hana Materials and Fantagio Corp, you can compare the effects of market volatilities on Hana Materials and Fantagio Corp 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 Materials with a short position of Fantagio Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Materials and Fantagio Corp.
Diversification Opportunities for Hana Materials and Fantagio Corp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hana and Fantagio is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Fantagio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantagio Corp and Hana Materials 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 Materials are associated (or correlated) with Fantagio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantagio Corp has no effect on the direction of Hana Materials i.e., Hana Materials and Fantagio Corp go up and down completely randomly.
Pair Corralation between Hana Materials and Fantagio Corp
Assuming the 90 days trading horizon Hana Materials is expected to generate 1.06 times more return on investment than Fantagio Corp. However, Hana Materials is 1.06 times more volatile than Fantagio Corp. It trades about -0.1 of its potential returns per unit of risk. Fantagio Corp is currently generating about -0.22 per unit of risk. If you would invest 2,905,000 in Hana Materials on September 19, 2024 and sell it today you would lose (490,000) from holding Hana Materials or give up 16.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 77.05% |
Values | Daily Returns |
Hana Materials vs. Fantagio Corp
Performance |
Timeline |
Hana Materials |
Fantagio Corp |
Hana Materials and Fantagio Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hana Materials and Fantagio Corp
The main advantage of trading using opposite Hana Materials and Fantagio Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Materials position performs unexpectedly, Fantagio Corp 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 Fantagio Corp will offset losses from the drop in Fantagio Corp's long position.Hana Materials vs. Daedong Steel Co | Hana Materials vs. Woorim Machinery Co | Hana Materials vs. Dong A Steel Technology | Hana Materials vs. Hanshin Construction Co |
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Check out your portfolio center.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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