Correlation Between Namhae Chemical and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Hyundai Home 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 Hyundai Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Hyundai Home Shopping, you can compare the effects of market volatilities on Namhae Chemical and Hyundai Home 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 Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Hyundai Home.
Diversification Opportunities for Namhae Chemical and Hyundai Home
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Namhae and Hyundai is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping 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 Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Hyundai Home go up and down completely randomly.
Pair Corralation between Namhae Chemical and Hyundai Home
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 2.44 times less return on investment than Hyundai Home. But when comparing it to its historical volatility, Namhae Chemical is 1.92 times less risky than Hyundai Home. It trades about 0.16 of its potential returns per unit of risk. Hyundai Home Shopping is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,840,000 in Hyundai Home Shopping on November 28, 2024 and sell it today you would earn a total of 370,000 from holding Hyundai Home Shopping or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Hyundai Home Shopping
Performance |
| Timeline |
| Namhae Chemical |
| Hyundai Home Shopping |
Namhae Chemical and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Hyundai Home
The main advantage of trading using opposite Namhae Chemical and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Hyundai Home 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 Hyundai Home will offset losses from the drop in Hyundai Home's long position.| Namhae Chemical vs. Daishin Information Communications | Namhae Chemical vs. Eugene Investment Securities | Namhae Chemical vs. Samyung Trading Co | Namhae Chemical vs. Sangsangin Investment Securities |
| Hyundai Home vs. Kolon Plastics | Hyundai Home vs. INNOX Advanced Materials | Hyundai Home vs. Chorokbaem Healthcare Co | Hyundai Home vs. EV Advanced Material |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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