Correlation Between Namhae Chemical and Playgram
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Playgram 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 Playgram into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Playgram Co, you can compare the effects of market volatilities on Namhae Chemical and Playgram 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 Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Playgram.
Diversification Opportunities for Namhae Chemical and Playgram
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Namhae and Playgram is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram 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 Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Playgram go up and down completely randomly.
Pair Corralation between Namhae Chemical and Playgram
Assuming the 90 days trading horizon Namhae Chemical is expected to under-perform the Playgram. But the stock apears to be less risky and, when comparing its historical volatility, Namhae Chemical is 5.69 times less risky than Playgram. The stock trades about -0.1 of its potential returns per unit of risk. The Playgram Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 36,500 in Playgram Co on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Playgram Co or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Playgram Co
Performance |
| Timeline |
| Namhae Chemical |
| Playgram |
Namhae Chemical and Playgram Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Playgram
The main advantage of trading using opposite Namhae Chemical and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Playgram 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 Playgram will offset losses from the drop in Playgram's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
| Playgram vs. LG Chemicals | Playgram vs. POSCO Holdings | Playgram vs. Hanwha Solutions | Playgram vs. Lotte Chemical Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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