Correlation Between NISSHA CO and Hana Microelectronics

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

By analyzing existing cross correlation between NISSHA LTD and Hana Microelectronics Public, you can compare the effects of market volatilities on NISSHA CO and Hana Microelectronics 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 NISSHA CO with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSHA CO and Hana Microelectronics.

Diversification Opportunities for NISSHA CO and Hana Microelectronics

0.32

Correlation Coefficient

NISSHA CO  Hana Microelectronics

Weak diversification

The 3 months correlation between NISSHA and Hana is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NISSHA LTD and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and NISSHA CO 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 NISSHA LTD are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of NISSHA CO i.e., NISSHA CO and Hana Microelectronics go up and down completely randomly.

Pair Corralation between NISSHA CO and Hana Microelectronics

Assuming the 90 days horizon NISSHA LTD is expected to under-perform the Hana Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, NISSHA LTD is 3.63 times less risky than Hana Microelectronics. The stock trades about -0.02 of its potential returns per unit of risk. The Hana Microelectronics Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Hana Microelectronics Public on October 4, 2024 and sell it today you would earn a total of  52.00  from holding Hana Microelectronics Public or generate 305.88% return on investment over 90 days.

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

NISSHA LTD  vs.  Hana Microelectronics Public

NISSHA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSHA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hana Microelectronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Microelectronics Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hana Microelectronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NISSHA CO and Hana Microelectronics

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

The idea behind NISSHA LTD and Hana Microelectronics Public 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.