Correlation Between Hana Financial and Settlebank

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

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

Diversification Opportunities for Hana Financial and Settlebank

0.12

Correlation Coefficient

Hana Financial  Settlebank

Average diversification

The 3 months correlation between Hana and Settlebank is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and Hana Financial 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 Financial are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Hana Financial i.e., Hana Financial and Settlebank go up and down completely randomly.

Pair Corralation between Hana Financial and Settlebank

Assuming the 90 days trading horizon Hana Financial is not expected to generate positive returns. However, Hana Financial is 1.22 times less risky than Settlebank. It waists most of its returns potential to compensate for thr risk taken. Settlebank is generating about -0.09 per unit of risk. If you would invest  6,099,310  in Hana Financial on September 14, 2024 and sell it today you would lose (99,310) from holding Hana Financial or give up 1.63% of portfolio value over 90 days.

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

Hana Financial  vs.  Settlebank

Hana Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hana Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hana Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank 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 Financial and Settlebank

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

The idea behind Hana Financial and Settlebank 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.