Correlation Between Hana Financial and Cheryong Electric

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

By analyzing existing cross correlation between Hana Financial 7 and Cheryong Electric CoLtd, you can compare the effects of market volatilities on Hana Financial and Cheryong Electric 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 Financial with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Cheryong Electric.

Diversification Opportunities for Hana Financial and Cheryong Electric

-0.5

Correlation Coefficient

Hana Financial  Cheryong Electric

Very good diversification

The 3 months correlation between Hana and Cheryong is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial 7 and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and Hana Financial 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 Financial 7 are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of Hana Financial i.e., Hana Financial and Cheryong Electric go up and down completely randomly.

Pair Corralation between Hana Financial and Cheryong Electric

Assuming the 90 days trading horizon Hana Financial 7 is expected to under-perform the Cheryong Electric. But the stock apears to be less risky and, when comparing its historical volatility, Hana Financial 7 is 1.29 times less risky than Cheryong Electric. The stock trades about -0.02 of its potential returns per unit of risk. The Cheryong Electric CoLtd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  968,461  in Cheryong Electric CoLtd on October 5, 2024 and sell it today you would earn a total of  3,776,539  from holding Cheryong Electric CoLtd or generate 389.95% return on investment over 90 days.

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

Hana Financial 7  vs.  Cheryong Electric CoLtd

Hana Financial 7

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial 7 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hana Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Cheryong Electric CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hana Financial and Cheryong Electric

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

The idea behind Hana Financial 7 and Cheryong Electric CoLtd 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .