Correlation Between Songwon Industrial and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial and Namhwa Industrial 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 Songwon Industrial and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Namhwa Industrial Co, you can compare the effects of market volatilities on Songwon Industrial and Namhwa Industrial 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 Songwon Industrial with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Namhwa Industrial.
Diversification Opportunities for Songwon Industrial and Namhwa Industrial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Songwon and Namhwa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and Songwon Industrial 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 Songwon Industrial Co are associated (or correlated) with Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Songwon Industrial i.e., Songwon Industrial and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Songwon Industrial and Namhwa Industrial
Assuming the 90 days trading horizon Songwon Industrial Co is expected to under-perform the Namhwa Industrial. In addition to that, Songwon Industrial is 1.65 times more volatile than Namhwa Industrial Co. It trades about -0.3 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.07 per unit of volatility. If you would invest 534,000 in Namhwa Industrial Co on August 29, 2024 and sell it today you would earn a total of 14,000 from holding Namhwa Industrial Co or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Namhwa Industrial Co
Performance |
| Timeline |
| Songwon Industrial |
| Namhwa Industrial |
Songwon Industrial and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Namhwa Industrial
The main advantage of trading using opposite Songwon Industrial and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Songwon Industrial vs. AptaBio Therapeutics | Songwon Industrial vs. Daewoo SBI SPAC | Songwon Industrial vs. Dream Security co | Songwon Industrial vs. Microfriend |
| Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Shinhan WTI Futures | Namhwa Industrial vs. Finebesteel |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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