Correlation Between Hansol Homedeco and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Hansol Homedeco and Namhwa Industrial 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 Hansol Homedeco and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansol Homedeco Co and Namhwa Industrial Co, you can compare the effects of market volatilities on Hansol Homedeco and Namhwa Industrial 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 Hansol Homedeco with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansol Homedeco and Namhwa Industrial.
Diversification Opportunities for Hansol Homedeco and Namhwa Industrial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hansol and Namhwa is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hansol Homedeco Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and Hansol Homedeco 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 Hansol Homedeco Co are associated (or correlated) with Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Hansol Homedeco i.e., Hansol Homedeco and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Hansol Homedeco and Namhwa Industrial
Assuming the 90 days trading horizon Hansol Homedeco Co is expected to under-perform the Namhwa Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Hansol Homedeco Co is 1.1 times less risky than Namhwa Industrial. The stock trades about -0.18 of its potential returns per unit of risk. The Namhwa Industrial Co is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 547,000 in Namhwa Industrial Co on September 4, 2024 and sell it today you would lose (27,000) from holding Namhwa Industrial Co or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansol Homedeco Co vs. Namhwa Industrial Co
Performance |
| Timeline |
| Hansol Homedeco |
| Namhwa Industrial |
Hansol Homedeco and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansol Homedeco and Namhwa Industrial
The main advantage of trading using opposite Hansol Homedeco and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansol Homedeco position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Hansol Homedeco vs. AptaBio Therapeutics | Hansol Homedeco vs. Daewoo SBI SPAC | Hansol Homedeco vs. Dream Security co | Hansol Homedeco vs. Microfriend |
| Namhwa Industrial vs. Korea Investment Holdings | Namhwa Industrial vs. Namhae Chemical | Namhwa Industrial vs. Dongnam Chemical Co | Namhwa Industrial vs. Cloud Air CoLtd |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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