Correlation Between Hanmi Financial and USA Recycling

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

By analyzing existing cross correlation between Hanmi Financial and USA Recycling Industries, you can compare the effects of market volatilities on Hanmi Financial and USA Recycling 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 USA Recycling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanmi Financial and USA Recycling.

Diversification Opportunities for Hanmi Financial and USA Recycling

-0.35

Correlation Coefficient

Hanmi Financial  USA Recycling

Very good diversification

The 3 months correlation between Hanmi and USA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and USA Recycling Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Recycling Industries 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 USA Recycling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Recycling Industries has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and USA Recycling go up and down completely randomly.

Pair Corralation between Hanmi Financial and USA Recycling

Given the investment horizon of 90 days Hanmi Financial is expected to generate 0.32 times more return on investment than USA Recycling. However, Hanmi Financial is 3.08 times less risky than USA Recycling. It trades about 0.13 of its potential returns per unit of risk. USA Recycling Industries is currently generating about -0.09 per unit of risk. If you would invest  1,600  in Hanmi Financial on September 29, 2024 and sell it today you would earn a total of  738.00  from holding Hanmi Financial or generate 46.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hanmi Financial  vs.  USA Recycling Industries

Hanmi Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Financial are ranked lower than 11 (%) 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.

USA Recycling Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USA Recycling Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hanmi Financial and USA Recycling

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

The idea behind Hanmi Financial and USA Recycling Industries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.