Correlation Between Ssangyong Materials and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Ssangyong Materials 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 Ssangyong Materials and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Materials Corp and Namhae Chemical, you can compare the effects of market volatilities on Ssangyong Materials 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 Ssangyong Materials with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Materials and Namhae Chemical.
Diversification Opportunities for Ssangyong Materials and Namhae Chemical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ssangyong and Namhae is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Materials Corp and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and Ssangyong Materials 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 Ssangyong Materials Corp 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 Ssangyong Materials i.e., Ssangyong Materials and Namhae Chemical go up and down completely randomly.
Pair Corralation between Ssangyong Materials and Namhae Chemical
Assuming the 90 days trading horizon Ssangyong Materials Corp is expected to generate 3.06 times more return on investment than Namhae Chemical. However, Ssangyong Materials is 3.06 times more volatile than Namhae Chemical. It trades about 0.01 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.05 per unit of risk. If you would invest 273,600 in Ssangyong Materials Corp on August 28, 2024 and sell it today you would lose (38,600) from holding Ssangyong Materials Corp or give up 14.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Materials Corp vs. Namhae Chemical
Performance |
| Timeline |
| Ssangyong Materials Corp |
| Namhae Chemical |
Ssangyong Materials and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Materials and Namhae Chemical
The main advantage of trading using opposite Ssangyong Materials and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Materials 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.| Ssangyong Materials vs. AptaBio Therapeutics | Ssangyong Materials vs. Daewoo SBI SPAC | Ssangyong Materials vs. Dream Security co | Ssangyong Materials vs. Microfriend |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. Lotte Chemical Corp | Namhae Chemical vs. Hyundai Steel | Namhae Chemical vs. Seah Steel Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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