Correlation Between Cloud Air and Nongshim
Can any of the company-specific risk be diversified away by investing in both Cloud Air and Nongshim 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 Cloud Air and Nongshim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloud Air CoLtd and Nongshim, you can compare the effects of market volatilities on Cloud Air and Nongshim 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 Cloud Air with a short position of Nongshim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Air and Nongshim.
Diversification Opportunities for Cloud Air and Nongshim
Poor diversification
The 3 months correlation between Cloud and Nongshim is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Air CoLtd and Nongshim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongshim and Cloud Air 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 Cloud Air CoLtd are associated (or correlated) with Nongshim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongshim has no effect on the direction of Cloud Air i.e., Cloud Air and Nongshim go up and down completely randomly.
Pair Corralation between Cloud Air and Nongshim
Assuming the 90 days trading horizon Cloud Air CoLtd is expected to under-perform the Nongshim. In addition to that, Cloud Air is 1.14 times more volatile than Nongshim. It trades about -0.01 of its total potential returns per unit of risk. Nongshim is currently generating about 0.01 per unit of volatility. If you would invest 32,625,600 in Nongshim on September 4, 2024 and sell it today you would earn a total of 1,224,400 from holding Nongshim or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloud Air CoLtd vs. Nongshim
Performance |
| Timeline |
| Cloud Air CoLtd |
| Nongshim |
Cloud Air and Nongshim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloud Air and Nongshim
The main advantage of trading using opposite Cloud Air and Nongshim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloud Air position performs unexpectedly, Nongshim 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 Nongshim will offset losses from the drop in Nongshim's long position.| Cloud Air vs. SK Hynix | Cloud Air vs. LX Semicon Co | Cloud Air vs. Tokai Carbon Korea | Cloud Air vs. People Technology |
| Nongshim vs. Kakao Games Corp | Nongshim vs. LG Household Healthcare | Nongshim vs. Cloud Air CoLtd | Nongshim vs. Bohae Brewery |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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