Correlation Between Nam Hwa and FOODWELL
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and FOODWELL 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 FOODWELL 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 FOODWELL Co, you can compare the effects of market volatilities on Nam Hwa and FOODWELL 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 FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and FOODWELL.
Diversification Opportunities for Nam Hwa and FOODWELL
Modest diversification
The 3 months correlation between Nam and FOODWELL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL 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 FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Nam Hwa i.e., Nam Hwa and FOODWELL go up and down completely randomly.
Pair Corralation between Nam Hwa and FOODWELL
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the FOODWELL. In addition to that, Nam Hwa is 1.37 times more volatile than FOODWELL Co. It trades about -0.08 of its total potential returns per unit of risk. FOODWELL Co is currently generating about -0.01 per unit of volatility. If you would invest 568,409 in FOODWELL Co on September 4, 2024 and sell it today you would lose (67,409) from holding FOODWELL Co or give up 11.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. FOODWELL Co
Performance |
| Timeline |
| Nam Hwa Construction |
| FOODWELL |
Nam Hwa and FOODWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and FOODWELL
The main advantage of trading using opposite Nam Hwa and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.| Nam Hwa vs. LG Display | Nam Hwa vs. Hyundai Motor | Nam Hwa vs. Hyundai Motor Co | Nam Hwa vs. Hyundai Motor Co |
| FOODWELL vs. LG Display | FOODWELL vs. Hyundai Motor | FOODWELL vs. Hyundai Motor Co | FOODWELL vs. Hyundai Motor Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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