Correlation Between HMCIB SPAC and Hana Financial

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

By analyzing existing cross correlation between HMCIB SPAC 3 and Hana Financial 7, you can compare the effects of market volatilities on HMCIB SPAC and Hana Financial 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 HMCIB SPAC with a short position of Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMCIB SPAC and Hana Financial.

Diversification Opportunities for HMCIB SPAC and Hana Financial

-0.68

Correlation Coefficient

HMCIB SPAC  Hana Financial

Excellent diversification

The 3 months correlation between HMCIB and Hana is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding HMCIB SPAC 3 and Hana Financial 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 7 and HMCIB SPAC 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 HMCIB SPAC 3 are associated (or correlated) with Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial 7 has no effect on the direction of HMCIB SPAC i.e., HMCIB SPAC and Hana Financial go up and down completely randomly.

Pair Corralation between HMCIB SPAC and Hana Financial

Assuming the 90 days trading horizon HMCIB SPAC 3 is expected to under-perform the Hana Financial. But the stock apears to be less risky and, when comparing its historical volatility, HMCIB SPAC 3 is 1.49 times less risky than Hana Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Hana Financial 7 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  811,000  in Hana Financial 7 on September 14, 2024 and sell it today you would earn a total of  657,000  from holding Hana Financial 7 or generate 81.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

HMCIB SPAC 3  vs.  Hana Financial 7

HMCIB SPAC 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMCIB SPAC 3 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.

Hana Financial 7

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Financial 7 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hana Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMCIB SPAC and Hana Financial

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

The idea behind HMCIB SPAC 3 and Hana Financial 7 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.