Correlation Between Danal and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Danal and Namhwa Industrial 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 Danal and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danal Co and Namhwa Industrial Co, you can compare the effects of market volatilities on Danal and Namhwa Industrial 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 Danal with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danal and Namhwa Industrial.
Diversification Opportunities for Danal and Namhwa Industrial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danal and Namhwa is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Danal Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and Danal 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 Danal Co are associated (or correlated) with Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Danal i.e., Danal and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Danal and Namhwa Industrial
Assuming the 90 days trading horizon Danal Co is expected to under-perform the Namhwa Industrial. In addition to that, Danal is 2.09 times more volatile than Namhwa Industrial Co. It trades about -0.07 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about -0.05 per unit of volatility. If you would invest 612,906 in Namhwa Industrial Co on September 3, 2024 and sell it today you would lose (92,906) from holding Namhwa Industrial Co or give up 15.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danal Co vs. Namhwa Industrial Co
Performance |
| Timeline |
| Danal |
| Namhwa Industrial |
Danal and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danal and Namhwa Industrial
The main advantage of trading using opposite Danal and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danal position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Danal vs. Shinsegae Information Communication | Danal vs. Daehan Synthetic Fiber | Danal vs. Youngchang Chemical Co | Danal vs. Samick Musical Instruments |
| Namhwa Industrial vs. Polaris Office Corp | Namhwa Industrial vs. Hansol Homedeco Co | Namhwa Industrial vs. Lotte Energy Materials | Namhwa Industrial vs. Daejung Chemicals Metals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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