Correlation Between Hana Microelectronics and Delta Electronics

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

Diversification Opportunities for Hana Microelectronics and Delta Electronics

-0.74

Correlation Coefficient

Hana Microelectronics  Delta Electronics

Pay attention - limited upside

The 3 months correlation between Hana and Delta is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hana Microelectronics Public and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of Hana Microelectronics i.e., Hana Microelectronics and Delta Electronics go up and down completely randomly.

Pair Corralation between Hana Microelectronics and Delta Electronics

Assuming the 90 days trading horizon Hana Microelectronics Public is expected to under-perform the Delta Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Hana Microelectronics Public is 1.23 times less risky than Delta Electronics. The stock trades about -0.41 of its potential returns per unit of risk. The Delta Electronics Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,800  in Delta Electronics Public on September 1, 2024 and sell it today you would earn a total of  1,250  from holding Delta Electronics Public or generate 9.06% return on investment over 90 days.

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

Hana Microelectronics Public  vs.  Delta Electronics Public

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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Delta Electronics Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Delta Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Microelectronics and Delta Electronics

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

The idea behind Hana Microelectronics Public and Delta Electronics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.