Correlation Between Korean Drug and NH Investment
Can any of the company-specific risk be diversified away by investing in both Korean Drug and NH 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 Korean Drug and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and NH Investment Securities, you can compare the effects of market volatilities on Korean Drug and NH 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 Korean Drug with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and NH Investment.
Diversification Opportunities for Korean Drug and NH Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korean and 005940 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Korean Drug 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 Korean Drug Co are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Korean Drug i.e., Korean Drug and NH Investment go up and down completely randomly.
Pair Corralation between Korean Drug and NH Investment
Assuming the 90 days trading horizon Korean Drug Co is expected to under-perform the NH Investment. In addition to that, Korean Drug is 1.02 times more volatile than NH Investment Securities. It trades about -0.23 of its total potential returns per unit of risk. NH Investment Securities is currently generating about -0.11 per unit of volatility. If you would invest 1,387,000 in NH Investment Securities on August 31, 2024 and sell it today you would lose (43,000) from holding NH Investment Securities or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. NH Investment Securities
Performance |
| Timeline |
| Korean Drug |
| NH Investment Securities |
Korean Drug and NH Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and NH Investment
The main advantage of trading using opposite Korean Drug and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, NH 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 NH Investment will offset losses from the drop in NH Investment's long position.| Korean Drug vs. SM Entertainment Co | Korean Drug vs. Korea Computer | Korean Drug vs. T3 Entertainment Co | Korean Drug vs. Alton Sports CoLtd |
| NH Investment vs. AptaBio Therapeutics | NH Investment vs. Daewoo SBI SPAC | NH Investment vs. Dream Security co | NH Investment vs. Microfriend |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |