Correlation Between Armada Hflr and Hana Microelectronics

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

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

Diversification Opportunities for Armada Hflr and Hana Microelectronics

0.1

Correlation Coefficient

Armada Hflr  Hana Microelectronics

Average diversification

The 3 months correlation between Armada and Hana is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Hana Microelectronics go up and down completely randomly.

Pair Corralation between Armada Hflr and Hana Microelectronics

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Hana Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 8.51 times less risky than Hana Microelectronics. The stock trades about -0.29 of its potential returns per unit of risk. The Hana Microelectronics Public is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Hana Microelectronics Public on September 23, 2024 and sell it today you would earn a total of  16.00  from holding Hana Microelectronics Public or generate 32.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  Hana Microelectronics Public

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hana Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hana Microelectronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hana Microelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Hflr and Hana Microelectronics

The main advantage of trading using opposite Armada Hflr and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr 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 Transaction History module to view history of all your transactions and understand their impact on performance.