Correlation Between Namhae Chemical and Mobile Appliance
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Mobile Appliance 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 Mobile Appliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Mobile Appliance, you can compare the effects of market volatilities on Namhae Chemical and Mobile Appliance 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 Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Mobile Appliance.
Diversification Opportunities for Namhae Chemical and Mobile Appliance
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Namhae and Mobile is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Mobile Appliance go up and down completely randomly.
Pair Corralation between Namhae Chemical and Mobile Appliance
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 1.31 times less return on investment than Mobile Appliance. But when comparing it to its historical volatility, Namhae Chemical is 2.28 times less risky than Mobile Appliance. It trades about 0.05 of its potential returns per unit of risk. Mobile Appliance is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 224,000 in Mobile Appliance on October 25, 2024 and sell it today you would earn a total of 4,000 from holding Mobile Appliance or generate 1.79% 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. Mobile Appliance
Performance |
| Timeline |
| Namhae Chemical |
| Mobile Appliance |
Namhae Chemical and Mobile Appliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Mobile Appliance
The main advantage of trading using opposite Namhae Chemical and Mobile Appliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Mobile Appliance 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 Mobile Appliance will offset losses from the drop in Mobile Appliance's long position.| Namhae Chemical vs. Dongwoo Farm To | Namhae Chemical vs. Nam Hwa Construction | Namhae Chemical vs. JC Chemical Co | Namhae Chemical vs. SH Energy Chemical |
| Mobile Appliance vs. Sungdo Engineering Construction | Mobile Appliance vs. Korean Drug Co | Mobile Appliance vs. Mirai Semiconductors Co | Mobile Appliance vs. BGF Retail Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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