Correlation Between Namyang Dairy and Cuckoo Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and Cuckoo Electronics 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 Cuckoo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and Cuckoo Electronics Co, you can compare the effects of market volatilities on Namyang Dairy and Cuckoo Electronics 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 Cuckoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and Cuckoo Electronics.

Diversification Opportunities for Namyang Dairy and Cuckoo Electronics

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Namyang and Cuckoo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics 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 Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and Cuckoo Electronics go up and down completely randomly.

Pair Corralation between Namyang Dairy and Cuckoo Electronics

Assuming the 90 days trading horizon Namyang Dairy is expected to generate 60.08 times more return on investment than Cuckoo Electronics. However, Namyang Dairy is 60.08 times more volatile than Cuckoo Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Cuckoo Electronics Co is currently generating about 0.08 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.38%
ValuesDaily Returns

Namyang Dairy  vs.  Cuckoo Electronics Co

 Performance 
       Timeline  
Namyang Dairy 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Namyang Dairy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namyang Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.
Cuckoo Electronics 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cuckoo Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cuckoo Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Namyang Dairy and Cuckoo Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Namyang Dairy and Cuckoo Electronics

The main advantage of trading using opposite Namyang Dairy and Cuckoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, Cuckoo Electronics 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 Cuckoo Electronics will offset losses from the drop in Cuckoo Electronics' long position.
The idea behind Namyang Dairy and Cuckoo Electronics Co 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.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Global Correlations
Find global opportunities by holding instruments from different markets
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio