Correlation Between Ford and Hana Financial

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

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

Diversification Opportunities for Ford and Hana Financial

0.14

Correlation Coefficient

Ford  Hana Financial

Average diversification

The 3 months correlation between Ford and Hana is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Ford 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 Ford Motor 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 has no effect on the direction of Ford i.e., Ford and Hana Financial go up and down completely randomly.

Pair Corralation between Ford and Hana Financial

Taking into account the 90-day investment horizon Ford is expected to generate 2.61 times less return on investment than Hana Financial. In addition to that, Ford is 1.51 times more volatile than Hana Financial. It trades about 0.04 of its total potential returns per unit of risk. Hana Financial is currently generating about 0.15 per unit of volatility. If you would invest  5,516,416  in Hana Financial on December 28, 2024 and sell it today you would earn a total of  643,584  from holding Hana Financial or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ford Motor  vs.  Hana Financial

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Hana Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial are ranked lower than 11 (%) 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 Ford and Hana Financial

The main advantage of trading using opposite Ford and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and Hana Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.