Correlation Between HANA Micron and KHVATEC CoLtd

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

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

Diversification Opportunities for HANA Micron and KHVATEC CoLtd

0.89

Correlation Coefficient

HANA Micron  KHVATEC CoLtd

Very poor diversification

The 3 months correlation between HANA and KHVATEC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HANA Micron and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd and HANA Micron 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 Micron are associated (or correlated) with KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of HANA Micron i.e., HANA Micron and KHVATEC CoLtd go up and down completely randomly.

Pair Corralation between HANA Micron and KHVATEC CoLtd

Assuming the 90 days trading horizon HANA Micron is expected to generate 1.58 times more return on investment than KHVATEC CoLtd. However, HANA Micron is 1.58 times more volatile than KHVATEC CoLtd. It trades about -0.07 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about -0.23 per unit of risk. If you would invest  1,106,000  in HANA Micron on September 14, 2024 and sell it today you would lose (172,000) from holding HANA Micron or give up 15.55% of portfolio value over 90 days.

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

HANA Micron  vs.  KHVATEC CoLtd

HANA Micron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HANA Micron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KHVATEC CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KHVATEC CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HANA Micron and KHVATEC CoLtd

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

The idea behind HANA Micron and KHVATEC CoLtd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.