Correlation Between NH Investment and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both NH Investment and Sejong Telecom 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 Sejong Telecom 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 Sejong Telecom, you can compare the effects of market volatilities on NH Investment and Sejong Telecom 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 Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Sejong Telecom.
Diversification Opportunities for NH Investment and Sejong Telecom
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 005940 and Sejong is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom 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 Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of NH Investment i.e., NH Investment and Sejong Telecom go up and down completely randomly.
Pair Corralation between NH Investment and Sejong Telecom
Assuming the 90 days trading horizon NH Investment Securities is expected to generate 1.16 times more return on investment than Sejong Telecom. However, NH Investment is 1.16 times more volatile than Sejong Telecom. It trades about -0.07 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.44 per unit of risk. If you would invest 1,362,000 in NH Investment Securities on August 28, 2024 and sell it today you would lose (29,000) from holding NH Investment Securities or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Investment Securities vs. Sejong Telecom
Performance |
| Timeline |
| NH Investment Securities |
| Sejong Telecom |
NH Investment and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Sejong Telecom
The main advantage of trading using opposite NH Investment and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| NH Investment vs. LG Display Co | NH Investment vs. Nasmedia Co | NH Investment vs. PlayD Co | NH Investment vs. KIWI Media Group |
| Sejong Telecom vs. AfreecaTV Co | Sejong Telecom vs. SS TECH | Sejong Telecom vs. Busan Industrial Co | Sejong Telecom vs. Busan Ind |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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