Correlation Between Nam Hwa and KIWI Media
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and KIWI Media 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 KIWI Media 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 KIWI Media Group, you can compare the effects of market volatilities on Nam Hwa and KIWI Media 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 KIWI Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and KIWI Media.
Diversification Opportunities for Nam Hwa and KIWI Media
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nam and KIWI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and KIWI Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIWI Media Group 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 KIWI Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIWI Media Group has no effect on the direction of Nam Hwa i.e., Nam Hwa and KIWI Media go up and down completely randomly.
Pair Corralation between Nam Hwa and KIWI Media
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 0.32 times more return on investment than KIWI Media. However, Nam Hwa Construction is 3.17 times less risky than KIWI Media. It trades about -0.07 of its potential returns per unit of risk. KIWI Media Group is currently generating about -0.03 per unit of risk. If you would invest 655,349 in Nam Hwa Construction on September 14, 2024 and sell it today you would lose (236,349) from holding Nam Hwa Construction or give up 36.06% 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. KIWI Media Group
Performance |
| Timeline |
| Nam Hwa Construction |
| KIWI Media Group |
Nam Hwa and KIWI Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and KIWI Media
The main advantage of trading using opposite Nam Hwa and KIWI Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, KIWI Media 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 KIWI Media will offset losses from the drop in KIWI Media's long position.| Nam Hwa vs. Korea Shipbuilding Offshore | Nam Hwa vs. Shinsegae Information Communication | Nam Hwa vs. Ssangyong Information Communication | Nam Hwa vs. Lotte Data Communication |
| KIWI Media vs. Nam Hwa Construction | KIWI Media vs. Ssangyong Information Communication | KIWI Media vs. Shinsegae Information Communication | KIWI Media vs. Daishin Information Communications |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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