Correlation Between Hanmi Financial and HONEYWELL

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

By analyzing existing cross correlation between Hanmi Financial and HONEYWELL INTERNATIONAL INC, you can compare the effects of market volatilities on Hanmi Financial and HONEYWELL 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 HONEYWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanmi Financial and HONEYWELL.

Diversification Opportunities for Hanmi Financial and HONEYWELL

-0.7

Correlation Coefficient

Hanmi Financial  HONEYWELL

Excellent diversification

The 3 months correlation between Hanmi and HONEYWELL is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL 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 HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTERNATIONAL has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and HONEYWELL go up and down completely randomly.

Pair Corralation between Hanmi Financial and HONEYWELL

Given the investment horizon of 90 days Hanmi Financial is expected to generate 0.99 times more return on investment than HONEYWELL. However, Hanmi Financial is 1.01 times less risky than HONEYWELL. It trades about 0.13 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.05 per unit of risk. If you would invest  1,898  in Hanmi Financial on September 23, 2024 and sell it today you would earn a total of  466.00  from holding Hanmi Financial or generate 24.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.23%
Values	Daily Returns

Hanmi Financial  vs.  HONEYWELL INTERNATIONAL INC

Hanmi Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Hanmi Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, HONEYWELL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanmi Financial and HONEYWELL

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

The idea behind Hanmi Financial and HONEYWELL INTERNATIONAL INC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.