Correlation Between Hanshin Construction and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and NewFlex Technology 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 Hanshin Construction and NewFlex Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and NewFlex Technology Co, you can compare the effects of market volatilities on Hanshin Construction and NewFlex Technology 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 Hanshin Construction with a short position of NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and NewFlex Technology.
Diversification Opportunities for Hanshin Construction and NewFlex Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanshin and NewFlex is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex Technology and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and NewFlex Technology go up and down completely randomly.
Pair Corralation between Hanshin Construction and NewFlex Technology
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 0.23 times more return on investment than NewFlex Technology. However, Hanshin Construction Co is 4.28 times less risky than NewFlex Technology. It trades about -0.08 of its potential returns per unit of risk. NewFlex Technology Co is currently generating about -0.08 per unit of risk. If you would invest 639,000 in Hanshin Construction Co on October 29, 2024 and sell it today you would lose (10,000) from holding Hanshin Construction Co or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. NewFlex Technology Co
Performance |
| Timeline |
| Hanshin Construction |
| NewFlex Technology |
Hanshin Construction and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and NewFlex Technology
The main advantage of trading using opposite Hanshin Construction and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, NewFlex Technology 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 NewFlex Technology will offset losses from the drop in NewFlex Technology's long position.| Hanshin Construction vs. GS Retail Co | Hanshin Construction vs. Insung Information Co | Hanshin Construction vs. Jeong Moon Information | Hanshin Construction vs. Koryo Credit Information |
| NewFlex Technology vs. Dgb Financial | NewFlex Technology vs. Bookook Steel | NewFlex Technology vs. KB Financial Group | NewFlex Technology vs. Korea Alcohol Industrial |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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