Correlation Between SH Energy and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both SH Energy and Namhae Chemical 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 SH Energy and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Namhae Chemical, you can compare the effects of market volatilities on SH Energy and Namhae Chemical 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 SH Energy with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Namhae Chemical.
Diversification Opportunities for SH Energy and Namhae Chemical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 002360 and Namhae is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and SH Energy 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 SH Energy Chemical are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of SH Energy i.e., SH Energy and Namhae Chemical go up and down completely randomly.
Pair Corralation between SH Energy and Namhae Chemical
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the Namhae Chemical. In addition to that, SH Energy is 1.93 times more volatile than Namhae Chemical. It trades about -0.03 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.05 per unit of volatility. If you would invest 936,294 in Namhae Chemical on November 2, 2024 and sell it today you would lose (291,294) from holding Namhae Chemical or give up 31.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Namhae Chemical
Performance |
| Timeline |
| SH Energy Chemical |
| Namhae Chemical |
SH Energy and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Namhae Chemical
The main advantage of trading using opposite SH Energy and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| SH Energy vs. Nable Communications | SH Energy vs. CU Medical Systems | SH Energy vs. ECSTELECOM Co | SH Energy vs. Green Cross Medical |
| Namhae Chemical vs. Daiyang Metal Co | Namhae Chemical vs. Eagon Industrial Co | Namhae Chemical vs. KT Submarine Telecom | Namhae Chemical vs. Korea Information Communications |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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