Correlation Between Naver and Bukwang Pharm
Can any of the company-specific risk be diversified away by investing in both Naver and Bukwang Pharm 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 Naver and Bukwang Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and Bukwang Pharm, you can compare the effects of market volatilities on Naver and Bukwang Pharm 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 Naver with a short position of Bukwang Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and Bukwang Pharm.
Diversification Opportunities for Naver and Bukwang Pharm
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naver and Bukwang is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Bukwang Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukwang Pharm and Naver 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 Naver are associated (or correlated) with Bukwang Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukwang Pharm has no effect on the direction of Naver i.e., Naver and Bukwang Pharm go up and down completely randomly.
Pair Corralation between Naver and Bukwang Pharm
Assuming the 90 days trading horizon Naver is expected to generate 0.91 times more return on investment than Bukwang Pharm. However, Naver is 1.1 times less risky than Bukwang Pharm. It trades about 0.07 of its potential returns per unit of risk. Bukwang Pharm is currently generating about -0.06 per unit of risk. If you would invest 17,680,000 in Naver on September 2, 2024 and sell it today you would earn a total of 2,970,000 from holding Naver or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naver vs. Bukwang Pharm
Performance |
| Timeline |
| Naver |
| Bukwang Pharm |
Naver and Bukwang Pharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and Bukwang Pharm
The main advantage of trading using opposite Naver and Bukwang Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, Bukwang Pharm 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 Bukwang Pharm will offset losses from the drop in Bukwang Pharm's long position.The idea behind Naver and Bukwang Pharm pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bukwang Pharm vs. Samyung Trading Co | Bukwang Pharm vs. Daiyang Metal Co | Bukwang Pharm vs. E Investment Development | Bukwang Pharm vs. DONGKUK TED METAL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |