Correlation Between Namhae Chemical and SH Energy
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and SH Energy 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 Namhae Chemical and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and SH Energy Chemical, you can compare the effects of market volatilities on Namhae Chemical and SH Energy 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 Namhae Chemical with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and SH Energy.
Diversification Opportunities for Namhae Chemical and SH Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Namhae and 002360 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Namhae 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 Namhae Chemical are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and SH Energy go up and down completely randomly.
Pair Corralation between Namhae Chemical and SH Energy
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.52 times more return on investment than SH Energy. However, Namhae Chemical is 1.93 times less risky than SH Energy. It trades about -0.05 of its potential returns per unit of risk. SH Energy Chemical is currently generating about -0.03 per unit of risk. If you would invest 936,294 in Namhae Chemical on November 2, 2024 and sell it today you would lose (291,294) from holding Namhae Chemical or give up 31.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. SH Energy Chemical
Performance |
| Timeline |
| Namhae Chemical |
| SH Energy Chemical |
Namhae Chemical and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and SH Energy
The main advantage of trading using opposite Namhae Chemical and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| Namhae Chemical vs. Daiyang Metal Co | Namhae Chemical vs. Eagon Industrial Co | Namhae Chemical vs. KT Submarine Telecom | Namhae Chemical vs. Korea Information Communications |
| SH Energy vs. Nable Communications | SH Energy vs. CU Medical Systems | SH Energy vs. ECSTELECOM Co | SH Energy vs. Green Cross Medical |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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