Correlation Between Hana Microelectronics and TMT Steel

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

Diversification Opportunities for Hana Microelectronics and TMT Steel

0.86

Correlation Coefficient

Hana Microelectronics  TMT Steel

Very poor diversification

The 3 months correlation between Hana and TMT is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hana Microelectronics Public and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel 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 TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of Hana Microelectronics i.e., Hana Microelectronics and TMT Steel go up and down completely randomly.

Pair Corralation between Hana Microelectronics and TMT Steel

Assuming the 90 days trading horizon Hana Microelectronics Public is expected to under-perform the TMT Steel. But the stock apears to be less risky and, when comparing its historical volatility, Hana Microelectronics Public is 15.36 times less risky than TMT Steel. The stock trades about -0.07 of its potential returns per unit of risk. The TMT Steel Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  678.00  in TMT Steel Public on December 2, 2024 and sell it today you would lose (410.00) from holding TMT Steel Public or give up 60.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Hana Microelectronics Public  vs.  TMT Steel Public

Hana Microelectronics

Risk-Adjusted Performance

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

TMT Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMT Steel 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 basic indicators remain quite persistent which may send shares a bit higher in April 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 TMT Steel

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

The idea behind Hana Microelectronics Public and TMT Steel 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.