Correlation Between Namhae Chemical and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Namhwa Industrial 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 Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Namhwa Industrial Co, you can compare the effects of market volatilities on Namhae Chemical and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Namhwa Industrial.
Diversification Opportunities for Namhae Chemical and Namhwa Industrial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhae and Namhwa is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Namhae Chemical and Namhwa Industrial
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.97 times more return on investment than Namhwa Industrial. However, Namhae Chemical is 1.03 times less risky than Namhwa Industrial. It trades about -0.05 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about -0.06 per unit of risk. If you would invest 865,737 in Namhae Chemical on September 12, 2024 and sell it today you would lose (245,737) from holding Namhae Chemical or give up 28.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Namhwa Industrial Co
Performance |
| Timeline |
| Namhae Chemical |
| Namhwa Industrial |
Namhae Chemical and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Namhwa Industrial
The main advantage of trading using opposite Namhae Chemical and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
| Namhwa Industrial vs. Solution Advanced Technology | Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Sam Chun Dang |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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