Correlation Between Husteel and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Husteel and Nable Communications 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 Husteel and Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husteel and Nable Communications, you can compare the effects of market volatilities on Husteel and Nable Communications 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 Husteel with a short position of Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and Nable Communications.
Diversification Opportunities for Husteel and Nable Communications
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Husteel and Nable is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications and Husteel 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 Husteel are associated (or correlated) with Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Husteel i.e., Husteel and Nable Communications go up and down completely randomly.
Pair Corralation between Husteel and Nable Communications
Assuming the 90 days trading horizon Husteel is expected to generate 1.54 times more return on investment than Nable Communications. However, Husteel is 1.54 times more volatile than Nable Communications. It trades about 0.01 of its potential returns per unit of risk. Nable Communications is currently generating about -0.02 per unit of risk. If you would invest 507,459 in Husteel on October 27, 2024 and sell it today you would lose (37,459) from holding Husteel or give up 7.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husteel vs. Nable Communications
Performance |
| Timeline |
| Husteel |
| Nable Communications |
Husteel and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husteel and Nable Communications
The main advantage of trading using opposite Husteel and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
| Nable Communications vs. Daejung Chemicals Metals | Nable Communications vs. DC Media Co | Nable Communications vs. SM Entertainment Co | Nable Communications vs. Alton Sports CoLtd |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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