Correlation Between KPX Green and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both KPX Green 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 KPX Green and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Nam Hwa Construction, you can compare the effects of market volatilities on KPX Green 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 KPX Green with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Nam Hwa.
Diversification Opportunities for KPX Green and Nam Hwa
Significant diversification
The 3 months correlation between KPX and Nam is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical 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 KPX Green 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 KPX Green Chemical 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 KPX Green i.e., KPX Green and Nam Hwa go up and down completely randomly.
Pair Corralation between KPX Green and Nam Hwa
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 1.26 times more return on investment than Nam Hwa. However, KPX Green is 1.26 times more volatile than Nam Hwa Construction. It trades about 0.07 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.01 per unit of risk. If you would invest 613,813 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 84,187 from holding KPX Green Chemical or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. Nam Hwa Construction
Performance |
| Timeline |
| KPX Green Chemical |
| Nam Hwa Construction |
KPX Green and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Nam Hwa
The main advantage of trading using opposite KPX Green and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green 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.| KPX Green vs. CKH Food Health | KPX Green vs. Keyang Electric Machinery | KPX Green vs. Nam Hwa Construction | KPX Green vs. Hanshin Construction Co |
| Nam Hwa vs. Seohee Construction Co | Nam Hwa vs. SEOJEON ELECTRIC MACHINERY | Nam Hwa vs. Hanmi Semiconductor Co | Nam Hwa vs. Semyung Electric Machinery |
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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