Correlation Between Namhae Chemical and TAEYANG
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and TAEYANG 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 TAEYANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and TAEYANG, you can compare the effects of market volatilities on Namhae Chemical and TAEYANG 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 TAEYANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and TAEYANG.
Diversification Opportunities for Namhae Chemical and TAEYANG
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Namhae and TAEYANG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and TAEYANG go up and down completely randomly.
Pair Corralation between Namhae Chemical and TAEYANG
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 2.19 times less return on investment than TAEYANG. In addition to that, Namhae Chemical is 1.03 times more volatile than TAEYANG. It trades about 0.05 of its total potential returns per unit of risk. TAEYANG is currently generating about 0.11 per unit of volatility. If you would invest 625,000 in TAEYANG on September 22, 2024 and sell it today you would earn a total of 22,000 from holding TAEYANG or generate 3.52% 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. TAEYANG
Performance |
| Timeline |
| Namhae Chemical |
| TAEYANG |
Namhae Chemical and TAEYANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and TAEYANG
The main advantage of trading using opposite Namhae Chemical and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.| Namhae Chemical vs. SBI Investment KOREA | Namhae Chemical vs. Netmarble Games Corp | Namhae Chemical vs. Kukdong Oil Chemicals | Namhae Chemical vs. Korean Reinsurance Co |
| TAEYANG vs. Sejong Telecom | TAEYANG vs. Hansol Chemical Co | TAEYANG vs. Nable Communications | TAEYANG vs. Namhae Chemical |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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