Correlation Between Geumhwa Plant and Nice Information
Can any of the company-specific risk be diversified away by investing in both Geumhwa Plant and Nice Information 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 Geumhwa Plant and Nice Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geumhwa Plant Service and Nice Information Telecommunication, you can compare the effects of market volatilities on Geumhwa Plant and Nice Information 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 Geumhwa Plant with a short position of Nice Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geumhwa Plant and Nice Information.
Diversification Opportunities for Geumhwa Plant and Nice Information
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geumhwa and Nice is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Geumhwa Plant Service and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel and Geumhwa Plant 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 Geumhwa Plant Service are associated (or correlated) with Nice Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Information Tel has no effect on the direction of Geumhwa Plant i.e., Geumhwa Plant and Nice Information go up and down completely randomly.
Pair Corralation between Geumhwa Plant and Nice Information
Assuming the 90 days trading horizon Geumhwa Plant Service is expected to under-perform the Nice Information. In addition to that, Geumhwa Plant is 1.95 times more volatile than Nice Information Telecommunication. It trades about -0.24 of its total potential returns per unit of risk. Nice Information Telecommunication is currently generating about -0.16 per unit of volatility. If you would invest 1,871,000 in Nice Information Telecommunication on August 29, 2024 and sell it today you would lose (42,000) from holding Nice Information Telecommunication or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geumhwa Plant Service vs. Nice Information Telecommunica
Performance |
| Timeline |
| Geumhwa Plant Service |
| Nice Information Tel |
Geumhwa Plant and Nice Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geumhwa Plant and Nice Information
The main advantage of trading using opposite Geumhwa Plant and Nice Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geumhwa Plant position performs unexpectedly, Nice Information 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 Nice Information will offset losses from the drop in Nice Information's long position.| Geumhwa Plant vs. Lotte Data Communication | Geumhwa Plant vs. Cube Entertainment | Geumhwa Plant vs. Polaris Office Corp | Geumhwa Plant vs. YG Entertainment |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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