Correlation Between Genie Music and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Genie Music and Namhae Chemical 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 Genie Music and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Namhae Chemical, you can compare the effects of market volatilities on Genie Music and Namhae Chemical 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 Genie Music with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Namhae Chemical.
Diversification Opportunities for Genie Music and Namhae Chemical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genie and Namhae is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and Genie Music 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 Genie Music are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Genie Music i.e., Genie Music and Namhae Chemical go up and down completely randomly.
Pair Corralation between Genie Music and Namhae Chemical
Assuming the 90 days trading horizon Genie Music is expected to under-perform the Namhae Chemical. In addition to that, Genie Music is 2.11 times more volatile than Namhae Chemical. It trades about -0.04 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.05 per unit of volatility. If you would invest 936,294 in Namhae Chemical on November 2, 2024 and sell it today you would lose (291,294) from holding Namhae Chemical or give up 31.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Namhae Chemical
Performance |
| Timeline |
| Genie Music |
| Namhae Chemical |
Genie Music and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Namhae Chemical
The main advantage of trading using opposite Genie Music and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Genie Music vs. Kolon Plastics | Genie Music vs. National Plastic Co | Genie Music vs. Homecast CoLtd | Genie Music vs. Ssangyong Information Communication |
| Namhae Chemical vs. Daiyang Metal Co | Namhae Chemical vs. Eagon Industrial Co | Namhae Chemical vs. KT Submarine Telecom | Namhae Chemical vs. Korea Information Communications |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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