Correlation Between Innowireless and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Innowireless and Nam Hwa 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 Innowireless and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and Nam Hwa Construction, you can compare the effects of market volatilities on Innowireless and Nam Hwa 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 Innowireless with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and Nam Hwa.
Diversification Opportunities for Innowireless and Nam Hwa
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innowireless and Nam is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Innowireless 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 Innowireless Co are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Innowireless i.e., Innowireless and Nam Hwa go up and down completely randomly.
Pair Corralation between Innowireless and Nam Hwa
Assuming the 90 days trading horizon Innowireless Co is expected to under-perform the Nam Hwa. In addition to that, Innowireless is 1.09 times more volatile than Nam Hwa Construction. It trades about -0.15 of its total potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.11 per unit of volatility. If you would invest 395,500 in Nam Hwa Construction on November 27, 2024 and sell it today you would earn a total of 12,000 from holding Nam Hwa Construction or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innowireless Co vs. Nam Hwa Construction
Performance |
| Timeline |
| Innowireless |
| Nam Hwa Construction |
Innowireless and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and Nam Hwa
The main advantage of trading using opposite Innowireless and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Innowireless vs. Daejoo Electronic Materials | Innowireless vs. Samyang Foods Co | Innowireless vs. Sungho Electronics Corp | Innowireless vs. Seoul Electronics Telecom |
| Nam Hwa vs. Silicon2 Co | Nam Hwa vs. Coloray International Investment | Nam Hwa vs. NewFlex Technology Co | Nam Hwa vs. AeroSpace Technology of |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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