Correlation Between Hana Financial and RFTech

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

Diversification Opportunities for Hana Financial and RFTech

0.9

Correlation Coefficient

Hana Financial  RFTech

Almost no diversification

The 3 months correlation between Hana and RFTech is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial 7 and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Hana Financial i.e., Hana Financial and RFTech go up and down completely randomly.

Pair Corralation between Hana Financial and RFTech

Assuming the 90 days trading horizon Hana Financial 7 is expected to under-perform the RFTech. In addition to that, Hana Financial is 1.93 times more volatile than RFTech Co. It trades about -0.02 of its total potential returns per unit of risk. RFTech Co is currently generating about -0.03 per unit of volatility. If you would invest  541,000  in RFTech Co on October 5, 2024 and sell it today you would lose (165,000) from holding RFTech Co or give up 30.5% of portfolio value over 90 days.

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

Hana Financial 7  vs.  RFTech Co

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.

RFTech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RFTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Financial and RFTech

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

The idea behind Hana Financial 7 and RFTech 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.