Correlation Between Hurum and Hana Financial

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

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

Diversification Opportunities for Hurum and Hana Financial

-0.46

Correlation Coefficient

Hurum  Hana Financial

Very good diversification

The 3 months correlation between Hurum and Hana is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co 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 Hurum 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 Hurum Co 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 Hurum i.e., Hurum and Hana Financial go up and down completely randomly.

Pair Corralation between Hurum and Hana Financial

Assuming the 90 days trading horizon Hurum is expected to generate 3.06 times less return on investment than Hana Financial. But when comparing it to its historical volatility, Hurum Co is 2.57 times less risky than Hana Financial. It trades about 0.27 of its potential returns per unit of risk. Hana Financial 7 is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,600,873  in Hana Financial 7 on October 22, 2024 and sell it today you would earn a total of  376,127  from holding Hana Financial 7 or generate 23.5% return on investment over 90 days.

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

Hurum Co  vs.  Hana Financial 7

Hurum

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Hurum and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum 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 Hurum Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.