Correlation Between National Plastic and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both National Plastic and Woorim Machinery 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 National Plastic and Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and Woorim Machinery Co, you can compare the effects of market volatilities on National Plastic and Woorim Machinery 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 National Plastic with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Woorim Machinery.
Diversification Opportunities for National Plastic and Woorim Machinery
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Woorim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery and National Plastic 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 National Plastic Co are associated (or correlated) with Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of National Plastic i.e., National Plastic and Woorim Machinery go up and down completely randomly.
Pair Corralation between National Plastic and Woorim Machinery
Assuming the 90 days trading horizon National Plastic Co is expected to generate 0.46 times more return on investment than Woorim Machinery. However, National Plastic Co is 2.16 times less risky than Woorim Machinery. It trades about 0.02 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.03 per unit of risk. If you would invest 260,000 in National Plastic Co on August 31, 2024 and sell it today you would earn a total of 2,000 from holding National Plastic Co or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. Woorim Machinery Co
Performance |
| Timeline |
| National Plastic |
| Woorim Machinery |
National Plastic and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and Woorim Machinery
The main advantage of trading using opposite National Plastic and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| National Plastic vs. Shinhan Financial Group | National Plastic vs. Koryo Credit Information | National Plastic vs. KakaoBank Corp | National Plastic vs. T3 Entertainment Co |
| Woorim Machinery vs. Pureun Mutual Savings | Woorim Machinery vs. TK Chemical | Woorim Machinery vs. Golden Bridge Investment | Woorim Machinery vs. Youngchang Chemical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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