Correlation Between Nam Hwa and Hanil Iron
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Hanil Iron 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 Nam Hwa and Hanil Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nam Hwa Construction and Hanil Iron Steel, you can compare the effects of market volatilities on Nam Hwa and Hanil Iron 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 Nam Hwa with a short position of Hanil Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Hanil Iron.
Diversification Opportunities for Nam Hwa and Hanil Iron
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nam and Hanil is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and Nam Hwa 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 Nam Hwa Construction are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of Nam Hwa i.e., Nam Hwa and Hanil Iron go up and down completely randomly.
Pair Corralation between Nam Hwa and Hanil Iron
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 1.89 times more return on investment than Hanil Iron. However, Nam Hwa is 1.89 times more volatile than Hanil Iron Steel. It trades about 0.01 of its potential returns per unit of risk. Hanil Iron Steel is currently generating about -0.04 per unit of risk. If you would invest 403,084 in Nam Hwa Construction on October 14, 2024 and sell it today you would lose (1,584) from holding Nam Hwa Construction or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. Hanil Iron Steel
Performance |
| Timeline |
| Nam Hwa Construction |
| Hanil Iron Steel |
Nam Hwa and Hanil Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Hanil Iron
The main advantage of trading using opposite Nam Hwa and Hanil Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Hanil Iron 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 Hanil Iron will offset losses from the drop in Hanil Iron's long position.| Nam Hwa vs. Seohee Construction Co | Nam Hwa vs. SEOJEON ELECTRIC MACHINERY | Nam Hwa vs. Hanmi Semiconductor Co | Nam Hwa vs. Semyung Electric Machinery |
| Hanil Iron vs. Camus Engineering Construction | Hanil Iron vs. GS Engineering Construction | Hanil Iron vs. Nam Hwa Construction | Hanil Iron vs. Dongbang Ship 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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