Correlation Between Hana Microelectronics and Central Retail

Can any of the company-specific risk be diversified away by investing in both Hana Microelectronics and Central Retail 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 Central Retail 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 Central Retail, you can compare the effects of market volatilities on Hana Microelectronics and Central Retail 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 Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Microelectronics and Central Retail.

Diversification Opportunities for Hana Microelectronics and Central Retail

-0.37

Correlation Coefficient

Hana Microelectronics  Central Retail

Very good diversification

The 3 months correlation between Hana and Central is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hana Microelectronics Public and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail 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 Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Hana Microelectronics i.e., Hana Microelectronics and Central Retail go up and down completely randomly.

Pair Corralation between Hana Microelectronics and Central Retail

Assuming the 90 days trading horizon Hana Microelectronics Public is expected to under-perform the Central Retail. In addition to that, Hana Microelectronics is 1.29 times more volatile than Central Retail. It trades about -0.19 of its total potential returns per unit of risk. Central Retail is currently generating about 0.1 per unit of volatility. If you would invest  2,975  in Central Retail on September 3, 2024 and sell it today you would earn a total of  375.00  from holding Central Retail or generate 12.61% return on investment over 90 days.

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

Hana Microelectronics Public  vs.  Central Retail

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Central Retail

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Central Retail disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Microelectronics and Central Retail

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

The idea behind Hana Microelectronics Public and Central Retail 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.