Correlation Between NH Investment and Korean Drug
Can any of the company-specific risk be diversified away by investing in both NH Investment and Korean Drug 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 NH Investment and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Investment Securities and Korean Drug Co, you can compare the effects of market volatilities on NH Investment and Korean Drug 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 NH Investment with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Korean Drug.
Diversification Opportunities for NH Investment and Korean Drug
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between 005940 and Korean is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and NH Investment 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 NH Investment Securities are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of NH Investment i.e., NH Investment and Korean Drug go up and down completely randomly.
Pair Corralation between NH Investment and Korean Drug
Assuming the 90 days trading horizon NH Investment is expected to generate 3.37 times less return on investment than Korean Drug. But when comparing it to its historical volatility, NH Investment Securities is 1.23 times less risky than Korean Drug. It trades about 0.08 of its potential returns per unit of risk. Korean Drug Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 457,904 in Korean Drug Co on October 21, 2024 and sell it today you would earn a total of 31,596 from holding Korean Drug Co or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Investment Securities vs. Korean Drug Co
Performance |
| Timeline |
| NH Investment Securities |
| Korean Drug |
NH Investment and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Korean Drug
The main advantage of trading using opposite NH Investment and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| NH Investment vs. Organic Special Pet | NH Investment vs. Ssangyong Information Communication | NH Investment vs. Insung Information Co | NH Investment vs. Moadata Co |
| Korean Drug vs. Mobileleader CoLtd | Korean Drug vs. GS Retail Co | Korean Drug vs. Nable Communications | Korean Drug vs. PJ Metal 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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