Correlation Between Oriental Precision and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Oriental Precision and Namyang Dairy 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 Oriental Precision and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Precision Engineering and Namyang Dairy, you can compare the effects of market volatilities on Oriental Precision and Namyang Dairy 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 Oriental Precision with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Precision and Namyang Dairy.
Diversification Opportunities for Oriental Precision and Namyang Dairy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oriental and Namyang is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Precision Engineering and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and Oriental Precision 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 Oriental Precision Engineering are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Oriental Precision i.e., Oriental Precision and Namyang Dairy go up and down completely randomly.
Pair Corralation between Oriental Precision and Namyang Dairy
Assuming the 90 days trading horizon Oriental Precision is expected to generate 27.8 times less return on investment than Namyang Dairy. But when comparing it to its historical volatility, Oriental Precision Engineering is 21.86 times less risky than Namyang Dairy. It trades about 0.05 of its potential returns per unit of risk. Namyang Dairy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,091,222 in Namyang Dairy on October 12, 2024 and sell it today you would earn a total of 1,008,778 from holding Namyang Dairy or generate 19.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Precision Engineering vs. Namyang Dairy
Performance |
| Timeline |
| Oriental Precision |
| Namyang Dairy |
Oriental Precision and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Precision and Namyang Dairy
The main advantage of trading using opposite Oriental Precision and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Precision position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Oriental Precision vs. TS Investment Corp | Oriental Precision vs. Atinum Investment Co | Oriental Precision vs. Korea Information Communications | Oriental Precision vs. Dongbang Transport Logistics |
| Namyang Dairy vs. KakaoBank Corp | Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Hankuk Steel Wire | Namyang Dairy vs. INSUN Environmental New |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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