Correlation Between ChemoMetec A/S and Hana Microelectronics

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

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

Diversification Opportunities for ChemoMetec A/S and Hana Microelectronics

-0.32

Correlation Coefficient

ChemoMetec A/S  Hana Microelectronics

Very good diversification

The 3 months correlation between ChemoMetec and Hana is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ChemoMetec AS and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and ChemoMetec A/S 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 ChemoMetec AS 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 ChemoMetec A/S i.e., ChemoMetec A/S and Hana Microelectronics go up and down completely randomly.

Pair Corralation between ChemoMetec A/S and Hana Microelectronics

Assuming the 90 days horizon ChemoMetec A/S is expected to generate 6.9 times less return on investment than Hana Microelectronics. But when comparing it to its historical volatility, ChemoMetec AS is 1.94 times less risky than Hana Microelectronics. It trades about 0.02 of its potential returns per unit of risk. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ChemoMetec AS  vs.  Hana Microelectronics Public

ChemoMetec A/S

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChemoMetec AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChemoMetec A/S reported solid returns over the last few months and may actually be approaching a breakup point.

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 ChemoMetec A/S and Hana Microelectronics

The main advantage of trading using opposite ChemoMetec A/S and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChemoMetec A/S 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 ChemoMetec AS 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.