Correlation Between Automobile and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Automobile and Namhae Chemical 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 Automobile and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Namhae Chemical, you can compare the effects of market volatilities on Automobile and Namhae Chemical 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 Automobile with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Namhae Chemical.
Diversification Opportunities for Automobile and Namhae Chemical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Namhae is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and Automobile 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 Automobile Pc are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Automobile i.e., Automobile and Namhae Chemical go up and down completely randomly.
Pair Corralation between Automobile and Namhae Chemical
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Namhae Chemical. In addition to that, Automobile is 2.05 times more volatile than Namhae Chemical. It trades about -0.18 of its total potential returns per unit of risk. Namhae Chemical is currently generating about 0.05 per unit of volatility. If you would invest 627,000 in Namhae Chemical on October 25, 2024 and sell it today you would earn a total of 15,000 from holding Namhae Chemical or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Namhae Chemical
Performance |
| Timeline |
| Automobile Pc |
| Namhae Chemical |
Automobile and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Namhae Chemical
The main advantage of trading using opposite Automobile and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Automobile vs. Sajo Seafood | Automobile vs. Duksan Hi Metal | Automobile vs. DONGKUK TED METAL | Automobile vs. FOODWELL Co |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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