Correlation Between Namhae Chemical and Genie Music
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Genie Music 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 Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Genie Music, you can compare the effects of market volatilities on Namhae Chemical and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Genie Music.
Diversification Opportunities for Namhae Chemical and Genie Music
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Namhae and Genie is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Genie Music go up and down completely randomly.
Pair Corralation between Namhae Chemical and Genie Music
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.47 times more return on investment than Genie Music. However, Namhae Chemical is 2.11 times less risky than Genie Music. It trades about -0.05 of its potential returns per unit of risk. Genie Music is currently generating about -0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Genie Music
Performance |
| Timeline |
| Namhae Chemical |
| Genie Music |
Namhae Chemical and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Genie Music
The main advantage of trading using opposite Namhae Chemical and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music'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 |
| Genie Music vs. Kolon Plastics | Genie Music vs. National Plastic Co | Genie Music vs. Homecast CoLtd | Genie Music vs. Ssangyong Information Communication |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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