Correlation Between Hana Materials and Korea Ratings

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

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

Diversification Opportunities for Hana Materials and Korea Ratings

-0.83

Correlation Coefficient

Hana Materials  Korea Ratings

Pay attention - limited upside

The 3 months correlation between Hana and Korea is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Korea Ratings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Ratings 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 Korea Ratings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Ratings has no effect on the direction of Hana Materials i.e., Hana Materials and Korea Ratings go up and down completely randomly.

Pair Corralation between Hana Materials and Korea Ratings

Assuming the 90 days trading horizon Hana Materials is expected to under-perform the Korea Ratings. In addition to that, Hana Materials is 4.57 times more volatile than Korea Ratings Co. It trades about -0.08 of its total potential returns per unit of risk. Korea Ratings Co is currently generating about 0.08 per unit of volatility. If you would invest  7,860,000  in Korea Ratings Co on October 7, 2024 and sell it today you would earn a total of  920,000  from holding Korea Ratings Co or generate 11.7% return on investment over 90 days.

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

Hana Materials  vs.  Korea Ratings Co

Hana Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hana Materials 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Korea Ratings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Ratings Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Ratings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hana Materials and Korea Ratings

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

The idea behind Hana Materials and Korea Ratings Co 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.