Correlation Between Namhae Chemical and UNISEM
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and UNISEM 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 UNISEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and UNISEM Co, you can compare the effects of market volatilities on Namhae Chemical and UNISEM 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 UNISEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and UNISEM.
Diversification Opportunities for Namhae Chemical and UNISEM
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Namhae and UNISEM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM 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 UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and UNISEM go up and down completely randomly.
Pair Corralation between Namhae Chemical and UNISEM
Assuming the 90 days trading horizon Namhae Chemical is expected to under-perform the UNISEM. But the stock apears to be less risky and, when comparing its historical volatility, Namhae Chemical is 2.69 times less risky than UNISEM. The stock trades about -0.05 of its potential returns per unit of risk. The UNISEM Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 738,999 in UNISEM Co on August 31, 2024 and sell it today you would lose (132,999) from holding UNISEM Co or give up 18.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Namhae Chemical vs. UNISEM Co
Performance |
| Timeline |
| Namhae Chemical |
| UNISEM |
Namhae Chemical and UNISEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and UNISEM
The main advantage of trading using opposite Namhae Chemical and UNISEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, UNISEM 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 UNISEM will offset losses from the drop in UNISEM's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
| UNISEM vs. Namhae Chemical | UNISEM vs. LG Chemicals | UNISEM vs. iNtRON Biotechnology | UNISEM vs. Home Center Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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