Correlation Between Nam Hwa and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and GS Engineering 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 GS Engineering 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 GS Engineering Construction, you can compare the effects of market volatilities on Nam Hwa and GS Engineering 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 GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and GS Engineering.
Diversification Opportunities for Nam Hwa and GS Engineering
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nam and 006360 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const 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 GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Nam Hwa i.e., Nam Hwa and GS Engineering go up and down completely randomly.
Pair Corralation between Nam Hwa and GS Engineering
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the GS Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 1.0 times less risky than GS Engineering. The stock trades about -0.06 of its potential returns per unit of risk. The GS Engineering Construction is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,970,536 in GS Engineering Construction on December 1, 2024 and sell it today you would lose (213,536) from holding GS Engineering Construction or give up 10.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. GS Engineering Construction
Performance |
| Timeline |
| Nam Hwa Construction |
| GS Engineering Const |
Nam Hwa and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and GS Engineering
The main advantage of trading using opposite Nam Hwa and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.| Nam Hwa vs. ITM Semiconductor Co | Nam Hwa vs. Kakao Games Corp | Nam Hwa vs. Korea Steel Co | Nam Hwa vs. Fine Besteel Co |
| GS Engineering vs. Barunson Entertainment Arts | GS Engineering vs. PJ Metal Co | GS Engineering vs. LEENO Industrial | GS Engineering vs. Duksan Hi Metal |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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