Correlation Between Namyang Dairy and HYUNDAI BIOLAND
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and HYUNDAI BIOLAND CoLtd, you can compare the effects of market volatilities on Namyang Dairy and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and HYUNDAI BIOLAND.
Diversification Opportunities for Namyang Dairy and HYUNDAI BIOLAND
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namyang and HYUNDAI is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and HYUNDAI BIOLAND CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYUNDAI BIOLAND CoLtd 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 HYUNDAI BIOLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYUNDAI BIOLAND CoLtd has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and HYUNDAI BIOLAND go up and down completely randomly.
Pair Corralation between Namyang Dairy and HYUNDAI BIOLAND
Assuming the 90 days trading horizon Namyang Dairy is expected to generate 104.12 times more return on investment than HYUNDAI BIOLAND. However, Namyang Dairy is 104.12 times more volatile than HYUNDAI BIOLAND CoLtd. It trades about 0.2 of its potential returns per unit of risk. HYUNDAI BIOLAND CoLtd is currently generating about -0.42 per unit of risk. If you would invest 6,950,000 in Namyang Dairy on September 3, 2024 and sell it today you would lose (140,000) from holding Namyang Dairy or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Namyang Dairy vs. HYUNDAI BIOLAND CoLtd
Performance |
| Timeline |
| Namyang Dairy |
| HYUNDAI BIOLAND CoLtd |
Namyang Dairy and HYUNDAI BIOLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namyang Dairy and HYUNDAI BIOLAND
The main advantage of trading using opposite Namyang Dairy and HYUNDAI BIOLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, HYUNDAI BIOLAND 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 HYUNDAI BIOLAND will offset losses from the drop in HYUNDAI BIOLAND's long position.| Namyang Dairy vs. LG Display | Namyang Dairy vs. Hyundai Motor | Namyang Dairy vs. Hyundai Motor Co | Namyang Dairy vs. Hyundai Motor Co |
| HYUNDAI BIOLAND vs. LG Display | HYUNDAI BIOLAND vs. Hyundai Motor | HYUNDAI BIOLAND vs. Hyundai Motor Co | HYUNDAI BIOLAND vs. Hyundai Motor Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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