Correlation Between Microsoft and Hana Financial

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

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

Diversification Opportunities for Microsoft and Hana Financial

-0.54

Correlation Coefficient

Microsoft  Hana Financial

Excellent diversification

The 3 months correlation between Microsoft and Hana is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial and Microsoft 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 Microsoft are associated (or correlated) with Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Microsoft i.e., Microsoft and Hana Financial go up and down completely randomly.

Pair Corralation between Microsoft and Hana Financial

Given the investment horizon of 90 days Microsoft is expected to under-perform the Hana Financial. In addition to that, Microsoft is 1.17 times more volatile than Hana Financial. It trades about -0.11 of its total potential returns per unit of risk. Hana Financial is currently generating about 0.14 per unit of volatility. If you would invest  5,516,416  in Hana Financial on December 30, 2024 and sell it today you would earn a total of  613,584  from holding Hana Financial or generate 11.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Microsoft  vs.  Hana Financial

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hana Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hana Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Hana Financial

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

The idea behind Microsoft and Hana Financial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.