Correlation Between NH Investment and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both NH Investment and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on NH Investment and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Woorim Machinery.
Diversification Opportunities for NH Investment and Woorim Machinery
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 005940 and Woorim is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of NH Investment i.e., NH Investment and Woorim Machinery go up and down completely randomly.
Pair Corralation between NH Investment and Woorim Machinery
Assuming the 90 days trading horizon NH Investment Securities is expected to under-perform the Woorim Machinery. But the stock apears to be less risky and, when comparing its historical volatility, NH Investment Securities is 3.08 times less risky than Woorim Machinery. The stock trades about 0.0 of its potential returns per unit of risk. The Woorim Machinery Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 478,000 in Woorim Machinery Co on October 24, 2024 and sell it today you would earn a total of 73,000 from holding Woorim Machinery Co or generate 15.27% 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. Woorim Machinery Co
Performance |
| Timeline |
| NH Investment Securities |
| Woorim Machinery |
NH Investment and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Investment and Woorim Machinery
The main advantage of trading using opposite NH Investment and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| NH Investment vs. Seoul Food Industrial | NH Investment vs. Pyung Hwa Industrial | NH Investment vs. Samyang Foods Co | NH Investment vs. Korea Shipbuilding Offshore |
| Woorim Machinery vs. Korean Air Lines | Woorim Machinery vs. NH Investment Securities | Woorim Machinery vs. Duksan Hi Metal | Woorim Machinery vs. Daol Investment Securities |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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