Correlation Between Hana Microelectronics and AJ Advance

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

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

Diversification Opportunities for Hana Microelectronics and AJ Advance

0.82

Correlation Coefficient

Hana Microelectronics  AJ Advance

Very poor diversification

The 3 months correlation between Hana and AJA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hana Microelectronics Public and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology and Hana Microelectronics 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 Hana Microelectronics Public are associated (or correlated) with AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Hana Microelectronics i.e., Hana Microelectronics and AJ Advance go up and down completely randomly.

Pair Corralation between Hana Microelectronics and AJ Advance

Assuming the 90 days trading horizon Hana Microelectronics Public is expected to under-perform the AJ Advance. But the stock apears to be less risky and, when comparing its historical volatility, Hana Microelectronics Public is 16.12 times less risky than AJ Advance. The stock trades about -0.04 of its potential returns per unit of risk. The AJ Advance Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24.00  in AJ Advance Technology on October 11, 2024 and sell it today you would lose (10.00) from holding AJ Advance Technology or give up 41.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Hana Microelectronics Public  vs.  AJ Advance Technology

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AJ Advance Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AJ Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Hana Microelectronics and AJ Advance

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

The idea behind Hana Microelectronics Public and AJ Advance Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.