Correlation Between GREENLIGHT CAP and Hana Microelectronics

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

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

Diversification Opportunities for GREENLIGHT CAP and Hana Microelectronics

-0.42

Correlation Coefficient

GREENLIGHT CAP  Hana Microelectronics

Very good diversification

The 3 months correlation between GREENLIGHT and Hana is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAP RE and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and GREENLIGHT CAP 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 GREENLIGHT CAP RE 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 GREENLIGHT CAP i.e., GREENLIGHT CAP and Hana Microelectronics go up and down completely randomly.

Pair Corralation between GREENLIGHT CAP and Hana Microelectronics

Assuming the 90 days trading horizon GREENLIGHT CAP is expected to generate 4.16 times less return on investment than Hana Microelectronics. But when comparing it to its historical volatility, GREENLIGHT CAP RE is 4.54 times less risky than Hana Microelectronics. It trades about 0.07 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Hana Microelectronics Public on September 23, 2024 and sell it today you would earn a total of  51.00  from holding Hana Microelectronics Public or generate 364.29% return on investment over 90 days.

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

GREENLIGHT CAP RE  vs.  Hana Microelectronics Public

GREENLIGHT CAP RE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAP RE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, GREENLIGHT CAP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 GREENLIGHT CAP and Hana Microelectronics

The main advantage of trading using opposite GREENLIGHT CAP and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENLIGHT CAP 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 GREENLIGHT CAP RE 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.