Correlation Between Daishin Balance and HANA Micron

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

By analyzing existing cross correlation between Daishin Balance No8 and HANA Micron, you can compare the effects of market volatilities on Daishin Balance and HANA Micron 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 Daishin Balance with a short position of HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and HANA Micron.

Diversification Opportunities for Daishin Balance and HANA Micron

0.91

Correlation Coefficient

Daishin Balance  HANA Micron

Almost no diversification

The 3 months correlation between Daishin and HANA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron and Daishin Balance 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 Daishin Balance No8 are associated (or correlated) with HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Daishin Balance i.e., Daishin Balance and HANA Micron go up and down completely randomly.

Pair Corralation between Daishin Balance and HANA Micron

Assuming the 90 days trading horizon Daishin Balance No8 is expected to generate 1.2 times more return on investment than HANA Micron. However, Daishin Balance is 1.2 times more volatile than HANA Micron. It trades about 0.38 of its potential returns per unit of risk. HANA Micron is currently generating about 0.41 per unit of risk. If you would invest  386,000  in Daishin Balance No8 on October 9, 2024 and sell it today you would earn a total of  144,000  from holding Daishin Balance No8 or generate 37.31% return on investment over 90 days.

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

Daishin Balance No8  vs.  HANA Micron

Daishin Balance No8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No8 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.

HANA Micron

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HANA Micron are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HANA Micron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daishin Balance and HANA Micron

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

The idea behind Daishin Balance No8 and HANA Micron 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.