Correlation Between Seohee Construction and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Seohee Construction and Nam Hwa 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 Seohee Construction and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seohee Construction Co and Nam Hwa Construction, you can compare the effects of market volatilities on Seohee Construction and Nam Hwa 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 Seohee Construction with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seohee Construction and Nam Hwa.
Diversification Opportunities for Seohee Construction and Nam Hwa
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seohee and Nam is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Seohee Construction Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Seohee Construction 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 Seohee Construction Co are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Seohee Construction i.e., Seohee Construction and Nam Hwa go up and down completely randomly.
Pair Corralation between Seohee Construction and Nam Hwa
Assuming the 90 days trading horizon Seohee Construction Co is expected to generate 1.08 times more return on investment than Nam Hwa. However, Seohee Construction is 1.08 times more volatile than Nam Hwa Construction. It trades about -0.03 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.07 per unit of risk. If you would invest 159,400 in Seohee Construction Co on October 28, 2024 and sell it today you would lose (1,800) from holding Seohee Construction Co or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seohee Construction Co vs. Nam Hwa Construction
Performance |
| Timeline |
| Seohee Construction |
| Nam Hwa Construction |
Seohee Construction and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seohee Construction and Nam Hwa
The main advantage of trading using opposite Seohee Construction and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seohee Construction position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Seohee Construction vs. KCC Engineering Construction | Seohee Construction vs. Samchuly Bicycle Co | Seohee Construction vs. SFA Engineering | Seohee Construction vs. SEOHAN Const EngcoLtd |
| Nam Hwa vs. Nice Information Telecommunication | Nam Hwa vs. Moadata Co | Nam Hwa vs. Golden Bridge Investment | Nam Hwa vs. Woori Technology Investment |
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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