Correlation Between Sungdo Engineering and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Sungdo Engineering 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 Sungdo Engineering and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungdo Engineering Construction and Nam Hwa Construction, you can compare the effects of market volatilities on Sungdo Engineering 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 Sungdo Engineering with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungdo Engineering and Nam Hwa.
Diversification Opportunities for Sungdo Engineering and Nam Hwa
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sungdo and Nam is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio 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 Sungdo Engineering 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 Sungdo Engineering Construction 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 Sungdo Engineering i.e., Sungdo Engineering and Nam Hwa go up and down completely randomly.
Pair Corralation between Sungdo Engineering and Nam Hwa
Assuming the 90 days trading horizon Sungdo Engineering Construction is expected to under-perform the Nam Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Sungdo Engineering Construction is 1.29 times less risky than Nam Hwa. The stock trades about -0.08 of its potential returns per unit of risk. The Nam Hwa Construction is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 393,205 in Nam Hwa Construction on October 26, 2024 and sell it today you would earn a total of 3,295 from holding Nam Hwa Construction or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sungdo Engineering Constructio vs. Nam Hwa Construction
Performance |
| Timeline |
| Sungdo Engineering |
| Nam Hwa Construction |
Sungdo Engineering and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungdo Engineering and Nam Hwa
The main advantage of trading using opposite Sungdo Engineering and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungdo Engineering 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.| Sungdo Engineering vs. E Investment Development | Sungdo Engineering vs. Samick Musical Instruments | Sungdo Engineering vs. Woori Technology Investment | Sungdo Engineering vs. Playgram Co |
| Nam Hwa vs. DSC Investment | Nam Hwa vs. LG Display Co | Nam Hwa vs. NH Investment Securities | Nam Hwa vs. Samyung Trading Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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