Correlation Between NH Investment and Korea Investment
Can any of the company-specific risk be diversified away by investing in both NH Investment and Korea Investment 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 Korea Investment 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 Korea Investment Holdings, you can compare the effects of market volatilities on NH Investment and Korea Investment 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 Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Korea Investment.
Diversification Opportunities for NH Investment and Korea Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 005940 and Korea is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings 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 Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of NH Investment i.e., NH Investment and Korea Investment go up and down completely randomly.
Pair Corralation between NH Investment and Korea Investment
Assuming the 90 days trading horizon NH Investment is expected to generate 1.12 times less return on investment than Korea Investment. But when comparing it to its historical volatility, NH Investment Securities is 1.3 times less risky than Korea Investment. It trades about 0.09 of its potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,294,837 in Korea Investment Holdings on December 9, 2024 and sell it today you would earn a total of 125,163 from holding Korea Investment Holdings or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Investment Securities vs. Korea Investment Holdings
Performance |
| Timeline |
| NH Investment Securities |
| Korea Investment Holdings |
NH Investment and Korea Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Korea Investment
The main advantage of trading using opposite NH Investment and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Korea Investment 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 Korea Investment will offset losses from the drop in Korea Investment's long position.| NH Investment vs. Coloray International Investment | ||
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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