Correlation Between Hana Financial and Nature

Can any of the company-specific risk be diversified away by investing in both Hana Financial and Nature 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 Nature 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 Nature and Environment, you can compare the effects of market volatilities on Hana Financial and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Nature.

Diversification Opportunities for Hana Financial and Nature

-0.35

Correlation Coefficient

Hana Financial  Nature

Very good diversification

The 3 months correlation between Hana and Nature is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial 7 and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Hana Financial i.e., Hana Financial and Nature go up and down completely randomly.

Pair Corralation between Hana Financial and Nature

Assuming the 90 days trading horizon Hana Financial 7 is expected to generate 1.56 times more return on investment than Nature. However, Hana Financial is 1.56 times more volatile than Nature and Environment. It trades about 0.4 of its potential returns per unit of risk. Nature and Environment is currently generating about 0.08 per unit of risk. If you would invest  982,000  in Hana Financial 7 on September 20, 2024 and sell it today you would earn a total of  553,000  from holding Hana Financial 7 or generate 56.31% return on investment over 90 days.

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

Hana Financial 7  vs.  Nature and Environment

Hana Financial 7

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial 7 are ranked lower than 18 (%) 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.

Nature and Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nature and Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nature 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 Financial and Nature

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

The idea behind Hana Financial 7 and Nature and Environment 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.