Correlation Between Namyang Dairy and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and Oriental Precision 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 Namyang Dairy and Oriental Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and Oriental Precision Engineering, you can compare the effects of market volatilities on Namyang Dairy and Oriental Precision 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 Namyang Dairy with a short position of Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and Oriental Precision.
Diversification Opportunities for Namyang Dairy and Oriental Precision
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Namyang and Oriental is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision and Namyang Dairy 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 Namyang Dairy are associated (or correlated) with Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and Oriental Precision go up and down completely randomly.
Pair Corralation between Namyang Dairy and Oriental Precision
Assuming the 90 days trading horizon Namyang Dairy is expected to generate 28.66 times more return on investment than Oriental Precision. However, Namyang Dairy is 28.66 times more volatile than Oriental Precision Engineering. It trades about 0.1 of its potential returns per unit of risk. Oriental Precision Engineering is currently generating about 0.09 per unit of risk. If you would invest 5,160,000 in Namyang Dairy on September 24, 2024 and sell it today you would earn a total of 760,000 from holding Namyang Dairy or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.38% |
| Values | Daily Returns |
Namyang Dairy vs. Oriental Precision Engineering
Performance |
| Timeline |
| Namyang Dairy |
| Oriental Precision |
Namyang Dairy and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namyang Dairy and Oriental Precision
The main advantage of trading using opposite Namyang Dairy and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Namyang Dairy vs. FoodNamoo | Namyang Dairy vs. Samlip General Foods | Namyang Dairy vs. Organic Special Pet | Namyang Dairy vs. FOODWELL Co |
| Oriental Precision vs. KakaoBank Corp | Oriental Precision vs. NICE Information Service | Oriental Precision vs. Korea Information Engineering | Oriental Precision vs. Lotte Data Communication |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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