Correlation Between Hanmi Financial and Goodheart Willcox

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

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

Diversification Opportunities for Hanmi Financial and Goodheart Willcox

-0.5

Correlation Coefficient

Hanmi Financial  Goodheart Willcox

Very good diversification

The 3 months correlation between Hanmi and Goodheart is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and The Goodheart Willcox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodheart Willcox and Hanmi Financial 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 Hanmi Financial are associated (or correlated) with Goodheart Willcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodheart Willcox has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and Goodheart Willcox go up and down completely randomly.

Pair Corralation between Hanmi Financial and Goodheart Willcox

Given the investment horizon of 90 days Hanmi Financial is expected to generate 9.81 times less return on investment than Goodheart Willcox. But when comparing it to its historical volatility, Hanmi Financial is 1.8 times less risky than Goodheart Willcox. It trades about 0.01 of its potential returns per unit of risk. The Goodheart Willcox is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  27,537  in The Goodheart Willcox on October 13, 2024 and sell it today you would earn a total of  17,463  from holding The Goodheart Willcox or generate 63.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.8%
Values	Daily Returns

Hanmi Financial  vs.  The Goodheart Willcox

Hanmi Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Hanmi Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Goodheart Willcox

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Goodheart Willcox are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Goodheart Willcox may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hanmi Financial and Goodheart Willcox

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

The idea behind Hanmi Financial and The Goodheart Willcox 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.