Correlation Between Hana Materials and FNSTech

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

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

Diversification Opportunities for Hana Materials and FNSTech

0.87

Correlation Coefficient

Hana Materials  FNSTech

Very poor diversification

The 3 months correlation between Hana and FNSTech is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech 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 FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Hana Materials i.e., Hana Materials and FNSTech go up and down completely randomly.

Pair Corralation between Hana Materials and FNSTech

Assuming the 90 days trading horizon Hana Materials is expected to under-perform the FNSTech. But the stock apears to be less risky and, when comparing its historical volatility, Hana Materials is 1.13 times less risky than FNSTech. The stock trades about 0.0 of its potential returns per unit of risk. The FNSTech Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  723,000  in FNSTech Co on October 11, 2024 and sell it today you would earn a total of  126,000  from holding FNSTech Co or generate 17.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.81%
Values	Daily Returns

Hana Materials  vs.  FNSTech 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

FNSTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FNSTech Co 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.

Pair Trading with Hana Materials and FNSTech

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

The idea behind Hana Materials and FNSTech 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.