Correlation Between Richardson Electronics and Hana Microelectronics

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

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

Diversification Opportunities for Richardson Electronics and Hana Microelectronics

-0.43

Correlation Coefficient

Richardson Electronics  Hana Microelectronics

Very good diversification

The 3 months correlation between Richardson and Hana is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics i.e., Richardson Electronics and Hana Microelectronics go up and down completely randomly.

Pair Corralation between Richardson Electronics and Hana Microelectronics

Assuming the 90 days horizon Richardson Electronics is expected to under-perform the Hana Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Richardson Electronics is 2.02 times less risky than Hana Microelectronics. The stock trades about 0.0 of its potential returns per unit of risk. The Hana Microelectronics Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Hana Microelectronics Public on October 4, 2024 and sell it today you would earn a total of  52.00  from holding Hana Microelectronics Public or generate 305.88% return on investment over 90 days.

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

Richardson Electronics  vs.  Hana Microelectronics Public

Richardson Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Richardson Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Richardson Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Hana Microelectronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Microelectronics Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hana Microelectronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Richardson Electronics and Hana Microelectronics

The main advantage of trading using opposite Richardson Electronics and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics 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 Richardson Electronics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.