Correlation Between Morgan Stanley and Hana Microelectronics

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

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

Diversification Opportunities for Morgan Stanley and Hana Microelectronics

-0.16

Correlation Coefficient

Morgan Stanley  Hana Microelectronics

Good diversification

The 3 months correlation between Morgan and Hana is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Morgan Stanley 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 Morgan Stanley Direct are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Hana Microelectronics go up and down completely randomly.

Pair Corralation between Morgan Stanley and Hana Microelectronics

Given the investment horizon of 90 days Morgan Stanley is expected to generate 16.97 times less return on investment than Hana Microelectronics. But when comparing it to its historical volatility, Morgan Stanley Direct is 9.24 times less risky than Hana Microelectronics. It trades about 0.09 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Hana Microelectronics Public on September 23, 2024 and sell it today you would earn a total of  16.00  from holding Hana Microelectronics Public or generate 32.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Morgan Stanley Direct  vs.  Hana Microelectronics Public

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 nearly stable basic indicators, Hana Microelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Hana Microelectronics

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

The idea behind Morgan Stanley Direct and Hana Microelectronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.