Correlation Between Hana Financial and Pum Tech

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

By analyzing existing cross correlation between Hana Financial and Pum Tech Korea Co, you can compare the effects of market volatilities on Hana Financial and Pum Tech 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 Pum Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hana Financial and Pum Tech.

Diversification Opportunities for Hana Financial and Pum Tech

-0.37

Correlation Coefficient

Hana Financial  Pum Tech

Very good diversification

The 3 months correlation between Hana and Pum is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hana Financial and Pum Tech Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pum Tech Korea 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 Pum Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pum Tech Korea has no effect on the direction of Hana Financial i.e., Hana Financial and Pum Tech go up and down completely randomly.

Pair Corralation between Hana Financial and Pum Tech

Assuming the 90 days trading horizon Hana Financial is expected to under-perform the Pum Tech. But the stock apears to be less risky and, when comparing its historical volatility, Hana Financial is 1.44 times less risky than Pum Tech. The stock trades about -0.01 of its potential returns per unit of risk. The Pum Tech Korea Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,495,000  in Pum Tech Korea Co on September 26, 2024 and sell it today you would earn a total of  670,000  from holding Pum Tech Korea Co or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Hana Financial  vs.  Pum Tech Korea Co

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.

Pum Tech Korea

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pum Tech Korea Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pum Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hana Financial and Pum Tech

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

The idea behind Hana Financial and Pum Tech Korea Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.