Correlation Between Namhae Chemical and Xavis
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Xavis 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 Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Xavis Co, you can compare the effects of market volatilities on Namhae Chemical and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Xavis.
Diversification Opportunities for Namhae Chemical and Xavis
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Namhae and Xavis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Xavis go up and down completely randomly.
Pair Corralation between Namhae Chemical and Xavis
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 4.74 times less return on investment than Xavis. But when comparing it to its historical volatility, Namhae Chemical is 3.02 times less risky than Xavis. It trades about 0.07 of its potential returns per unit of risk. Xavis Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 137,600 in Xavis Co on November 7, 2024 and sell it today you would earn a total of 5,400 from holding Xavis Co or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Namhae Chemical vs. Xavis Co
Performance |
| Timeline |
| Namhae Chemical |
| Xavis |
Namhae Chemical and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Xavis
The main advantage of trading using opposite Namhae Chemical and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| Namhae Chemical vs. Neungyule Education | Namhae Chemical vs. Asia Technology Co | Namhae Chemical vs. NewFlex Technology Co | Namhae Chemical vs. Eagle Veterinary Technology |
| Xavis vs. Namhae Chemical | Xavis vs. Automobile Pc | Xavis vs. Choil Aluminum | Xavis vs. Hanwha Chemical Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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