Correlation Between Daishin Balance and Hana Financial

Can any of the company-specific risk be diversified away by investing in both Daishin Balance and Hana Financial 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 Financial 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 Financial 7, you can compare the effects of market volatilities on Daishin Balance and Hana Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and Hana Financial.

Diversification Opportunities for Daishin Balance and Hana Financial

-0.11

Correlation Coefficient

Daishin Balance  Hana Financial

Good diversification

The 3 months correlation between Daishin and Hana is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and Hana Financial 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 7 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial 7 has no effect on the direction of Daishin Balance i.e., Daishin Balance and Hana Financial go up and down completely randomly.

Pair Corralation between Daishin Balance and Hana Financial

Assuming the 90 days trading horizon Daishin Balance No8 is expected to generate 1.06 times more return on investment than Hana Financial. However, Daishin Balance is 1.06 times more volatile than Hana Financial 7. It trades about 0.03 of its potential returns per unit of risk. Hana Financial 7 is currently generating about -0.01 per unit of risk. If you would invest  483,000  in Daishin Balance No8 on October 22, 2024 and sell it today you would earn a total of  112,000  from holding Daishin Balance No8 or generate 23.19% return on investment over 90 days.

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

Daishin Balance No8  vs.  Hana Financial 7

Daishin Balance No8

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Balance No8 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daishin Balance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hana Financial 7

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial 7 are ranked lower than 21 (%) 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.

Pair Trading with Daishin Balance and Hana Financial

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

The idea behind Daishin Balance No8 and Hana Financial 7 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.