Correlation Between Hanmi Financial and Spectral Cap

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

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

Diversification Opportunities for Hanmi Financial and Spectral Cap

-0.54

Correlation Coefficient

Hanmi Financial  Spectral Cap

Excellent diversification

The 3 months correlation between Hanmi and Spectral is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and Spectral Cap Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectral Cap Corp and Hanmi 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 Hanmi Financial are associated (or correlated) with Spectral Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectral Cap Corp has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and Spectral Cap go up and down completely randomly.

Pair Corralation between Hanmi Financial and Spectral Cap

Given the investment horizon of 90 days Hanmi Financial is expected to generate 27.78 times less return on investment than Spectral Cap. But when comparing it to its historical volatility, Hanmi Financial is 4.46 times less risky than Spectral Cap. It trades about 0.02 of its potential returns per unit of risk. Spectral Cap Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Spectral Cap Corp on September 26, 2024 and sell it today you would earn a total of  508.00  from holding Spectral Cap Corp or generate 7257.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hanmi Financial  vs.  Spectral Cap Corp

Hanmi Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Hanmi Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Spectral Cap Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spectral Cap Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Spectral Cap displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanmi Financial and Spectral Cap

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

The idea behind Hanmi Financial and Spectral Cap Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.