Correlation Between SBI Investment and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both SBI Investment 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 SBI Investment and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and Namhae Chemical, you can compare the effects of market volatilities on SBI Investment 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 SBI Investment with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Namhae Chemical.
Diversification Opportunities for SBI Investment and Namhae Chemical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and Namhae is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and SBI 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 SBI Investment KOREA 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 SBI Investment i.e., SBI Investment and Namhae Chemical go up and down completely randomly.
Pair Corralation between SBI Investment and Namhae Chemical
Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 1.18 times more return on investment than Namhae Chemical. However, SBI Investment is 1.18 times more volatile than Namhae Chemical. It trades about 0.09 of its potential returns per unit of risk. Namhae Chemical is currently generating about 0.0 per unit of risk. If you would invest 70,200 in SBI Investment KOREA on December 10, 2024 and sell it today you would earn a total of 1,600 from holding SBI Investment KOREA or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. Namhae Chemical
Performance |
| Timeline |
| SBI Investment KOREA |
| Namhae Chemical |
SBI Investment and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and Namhae Chemical
The main advantage of trading using opposite SBI Investment and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment 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.| SBI Investment vs. Daewoo Electronic Components | SBI Investment vs. KG Eco Technology | SBI Investment vs. Daou Technology | SBI Investment vs. PJ Electronics Co |
| Namhae Chemical vs. DC Media Co | Namhae Chemical vs. SM Entertainment Co | Namhae Chemical vs. Hanwha Life Insurance | Namhae Chemical vs. Nasmedia Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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