Correlation Between I-Components and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both I-Components and Namyang Dairy 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 I-Components and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i Components Co and Namyang Dairy, you can compare the effects of market volatilities on I-Components and Namyang Dairy 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 I-Components with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Namyang Dairy.
Diversification Opportunities for I-Components and Namyang Dairy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between I-Components and Namyang is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and I-Components 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 i Components Co are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of I-Components i.e., I-Components and Namyang Dairy go up and down completely randomly.
Pair Corralation between I-Components and Namyang Dairy
Assuming the 90 days trading horizon i Components Co is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, i Components Co is 20.11 times less risky than Namyang Dairy. The stock trades about -0.01 of its potential returns per unit of risk. The Namyang Dairy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,497,246 in Namyang Dairy on September 24, 2024 and sell it today you would earn a total of 1,422,754 from holding Namyang Dairy or generate 31.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
i Components Co vs. Namyang Dairy
Performance |
| Timeline |
| i Components |
| Namyang Dairy |
I-Components and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I-Components and Namyang Dairy
The main advantage of trading using opposite I-Components and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| I-Components vs. Samsung Electronics Co | I-Components vs. Samsung Electronics Co | I-Components vs. LG Energy Solution | I-Components vs. SK Hynix |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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