Correlation Between Dongnam Chemical and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Nable Communications 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 Dongnam Chemical and Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and Nable Communications, you can compare the effects of market volatilities on Dongnam Chemical and Nable Communications 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 Dongnam Chemical with a short position of Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Nable Communications.
Diversification Opportunities for Dongnam Chemical and Nable Communications
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongnam and Nable is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications and Dongnam Chemical 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 Dongnam Chemical Co are associated (or correlated) with Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Nable Communications go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Nable Communications
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.65 times more return on investment than Nable Communications. However, Dongnam Chemical Co is 1.53 times less risky than Nable Communications. It trades about 0.44 of its potential returns per unit of risk. Nable Communications is currently generating about -0.03 per unit of risk. If you would invest 3,145,000 in Dongnam Chemical Co on October 22, 2024 and sell it today you would earn a total of 280,000 from holding Dongnam Chemical Co or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. Nable Communications
Performance |
| Timeline |
| Dongnam Chemical |
| Nable Communications |
Dongnam Chemical and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Nable Communications
The main advantage of trading using opposite Dongnam Chemical and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| Dongnam Chemical vs. Lotte Data Communication | Dongnam Chemical vs. Jeju Beer Co | Dongnam Chemical vs. Sungmoon Electronics Co | Dongnam Chemical vs. PJ Electronics Co |
| Nable Communications vs. Haitai Confectionery Foods | Nable Communications vs. Korean Air Lines | Nable Communications vs. SK Chemicals Co | Nable Communications vs. Choil Aluminum |
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 Stocks Directory module to find actively traded stocks across global markets.
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