Correlation Between NHN KCP and Winix
Can any of the company-specific risk be diversified away by investing in both NHN KCP and Winix 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 NHN KCP and Winix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NHN KCP Corp and Winix Inc, you can compare the effects of market volatilities on NHN KCP and Winix 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 NHN KCP with a short position of Winix. Check out your portfolio center. Please also check ongoing floating volatility patterns of NHN KCP and Winix.
Diversification Opportunities for NHN KCP and Winix
Poor diversification
The 3 months correlation between NHN and Winix is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NHN KCP Corp and Winix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winix Inc and NHN KCP 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 NHN KCP Corp are associated (or correlated) with Winix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winix Inc has no effect on the direction of NHN KCP i.e., NHN KCP and Winix go up and down completely randomly.
Pair Corralation between NHN KCP and Winix
Assuming the 90 days trading horizon NHN KCP Corp is expected to generate 1.02 times more return on investment than Winix. However, NHN KCP is 1.02 times more volatile than Winix Inc. It trades about 0.08 of its potential returns per unit of risk. Winix Inc is currently generating about -0.43 per unit of risk. If you would invest 724,000 in NHN KCP Corp on August 25, 2024 and sell it today you would earn a total of 23,000 from holding NHN KCP Corp or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NHN KCP Corp vs. Winix Inc
Performance |
| Timeline |
| NHN KCP Corp |
| Winix Inc |
NHN KCP and Winix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NHN KCP and Winix
The main advantage of trading using opposite NHN KCP and Winix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NHN KCP position performs unexpectedly, Winix 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 Winix will offset losses from the drop in Winix's long position.The idea behind NHN KCP Corp and Winix Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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