Correlation Between Com2uS and HANA Micron

Can any of the company-specific risk be diversified away by investing in both Com2uS and HANA Micron 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 Com2uS and HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com2uS and HANA Micron, you can compare the effects of market volatilities on Com2uS and HANA Micron 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 Com2uS with a short position of HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com2uS and HANA Micron.

Diversification Opportunities for Com2uS and HANA Micron

-0.6

Correlation Coefficient

Com2uS  HANA Micron

Excellent diversification

The 3 months correlation between Com2uS and HANA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Com2uS and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron and Com2uS 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 Com2uS are associated (or correlated) with HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Com2uS i.e., Com2uS and HANA Micron go up and down completely randomly.

Pair Corralation between Com2uS and HANA Micron

Assuming the 90 days trading horizon Com2uS is expected to generate 6.95 times less return on investment than HANA Micron. But when comparing it to its historical volatility, Com2uS is 1.66 times less risky than HANA Micron. It trades about 0.01 of its potential returns per unit of risk. HANA Micron is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  852,341  in HANA Micron on September 14, 2024 and sell it today you would earn a total of  81,659  from holding HANA Micron or generate 9.58% return on investment over 90 days.

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

Com2uS  vs.  HANA Micron

Com2uS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Com2uS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Com2uS sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Com2uS and HANA Micron

The main advantage of trading using opposite Com2uS and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com2uS position performs unexpectedly, HANA Micron 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 Micron will offset losses from the drop in HANA Micron's long position.

The idea behind Com2uS and HANA Micron 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.