Correlation Between Hana Materials and Cube Entertainment

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

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

Diversification Opportunities for Hana Materials and Cube Entertainment

-0.68

Correlation Coefficient

Hana Materials  Cube Entertainment

Excellent diversification

The 3 months correlation between Hana and Cube is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hana Materials and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Hana Materials i.e., Hana Materials and Cube Entertainment go up and down completely randomly.

Pair Corralation between Hana Materials and Cube Entertainment

Assuming the 90 days trading horizon Hana Materials is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Hana Materials is 1.1 times less risky than Cube Entertainment. The stock trades about -0.01 of its potential returns per unit of risk. The Cube Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,090,000  in Cube Entertainment on October 24, 2024 and sell it today you would lose (635,000) from holding Cube Entertainment or give up 30.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Hana Materials  vs.  Cube Entertainment

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 somewhat strong basic indicators, Hana Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cube Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cube Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cube Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hana Materials and Cube Entertainment

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

The idea behind Hana Materials and Cube Entertainment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.