Correlation Between Heerim Architects and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Heerim Architects 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 Heerim Architects and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heerim Architects Planners and Nam Hwa Construction, you can compare the effects of market volatilities on Heerim Architects 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 Heerim Architects with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heerim Architects and Nam Hwa.
Diversification Opportunities for Heerim Architects and Nam Hwa
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heerim and Nam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Heerim Architects Planners 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 Heerim Architects 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 Heerim Architects Planners 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 Heerim Architects i.e., Heerim Architects and Nam Hwa go up and down completely randomly.
Pair Corralation between Heerim Architects and Nam Hwa
Assuming the 90 days trading horizon Heerim Architects is expected to generate 1.58 times less return on investment than Nam Hwa. In addition to that, Heerim Architects is 1.52 times more volatile than Nam Hwa Construction. It trades about 0.02 of its total potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.05 per unit of volatility. If you would invest 396,500 in Nam Hwa Construction on September 12, 2024 and sell it today you would earn a total of 13,000 from holding Nam Hwa Construction or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Heerim Architects Planners vs. Nam Hwa Construction
Performance |
| Timeline |
| Heerim Architects |
| Nam Hwa Construction |
Heerim Architects and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heerim Architects and Nam Hwa
The main advantage of trading using opposite Heerim Architects and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heerim Architects 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.| Heerim Architects vs. Duksan Hi Metal | Heerim Architects vs. Hyundai Green Food | Heerim Architects vs. Heungkuk Metaltech CoLtd | Heerim Architects vs. MetaLabs Co |
| Nam Hwa vs. Korea New Network | Nam Hwa vs. Solution Advanced Technology | Nam Hwa vs. Busan Industrial Co | Nam Hwa vs. Busan Ind |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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