Correlation Between Namhae Chemical and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Korean Reinsurance 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 Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Korean Reinsurance Co, you can compare the effects of market volatilities on Namhae Chemical and Korean Reinsurance 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 Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Korean Reinsurance.
Diversification Opportunities for Namhae Chemical and Korean Reinsurance
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhae and Korean is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance 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 Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Namhae Chemical and Korean Reinsurance
Assuming the 90 days trading horizon Namhae Chemical is expected to under-perform the Korean Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Namhae Chemical is 1.26 times less risky than Korean Reinsurance. The stock trades about -0.1 of its potential returns per unit of risk. The Korean Reinsurance Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 782,500 in Korean Reinsurance Co on September 3, 2024 and sell it today you would earn a total of 28,500 from holding Korean Reinsurance Co or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Korean Reinsurance Co
Performance |
| Timeline |
| Namhae Chemical |
| Korean Reinsurance |
Namhae Chemical and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Korean Reinsurance
The main advantage of trading using opposite Namhae Chemical and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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