Correlation Between Sebo Manufacturing and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Sebo Manufacturing and Nam Hwa 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 Sebo Manufacturing and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sebo Manufacturing Engineering and Nam Hwa Construction, you can compare the effects of market volatilities on Sebo Manufacturing and Nam Hwa 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 Sebo Manufacturing with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sebo Manufacturing and Nam Hwa.
Diversification Opportunities for Sebo Manufacturing and Nam Hwa
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sebo and Nam is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sebo Manufacturing Engineering and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Sebo Manufacturing 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 Sebo Manufacturing Engineering are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Sebo Manufacturing i.e., Sebo Manufacturing and Nam Hwa go up and down completely randomly.
Pair Corralation between Sebo Manufacturing and Nam Hwa
Assuming the 90 days trading horizon Sebo Manufacturing is expected to generate 2.28 times less return on investment than Nam Hwa. But when comparing it to its historical volatility, Sebo Manufacturing Engineering is 1.8 times less risky than Nam Hwa. It trades about 0.04 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 398,000 in Nam Hwa Construction on August 28, 2024 and sell it today you would earn a total of 10,500 from holding Nam Hwa Construction or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sebo Manufacturing Engineering vs. Nam Hwa Construction
Performance |
| Timeline |
| Sebo Manufacturing |
| Nam Hwa Construction |
Sebo Manufacturing and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sebo Manufacturing and Nam Hwa
The main advantage of trading using opposite Sebo Manufacturing and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sebo Manufacturing position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Sebo Manufacturing vs. Samsung Electronics Co | Sebo Manufacturing vs. Samsung Electronics Co | Sebo Manufacturing vs. Hyundai Motor Co | Sebo Manufacturing vs. Hyundai Motor |
| Nam Hwa vs. Shin Steel Co | Nam Hwa vs. Moonbae Steel | Nam Hwa vs. Kukdong Oil Chemicals | Nam Hwa vs. Sung Bo Chemicals |
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 CEOs Directory module to screen CEOs from public companies around the world.
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