Correlation Between Nam Hwa and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Kukdong Oil 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 Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on Nam Hwa and Kukdong Oil 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 Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Kukdong Oil.
Diversification Opportunities for Nam Hwa and Kukdong Oil
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nam and Kukdong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals 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 Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of Nam Hwa i.e., Nam Hwa and Kukdong Oil go up and down completely randomly.
Pair Corralation between Nam Hwa and Kukdong Oil
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Kukdong Oil. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 1.26 times less risky than Kukdong Oil. The stock trades about -0.06 of its potential returns per unit of risk. The Kukdong Oil Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 323,438 in Kukdong Oil Chemicals on November 27, 2024 and sell it today you would earn a total of 25,562 from holding Kukdong Oil Chemicals or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| Nam Hwa Construction |
| Kukdong Oil Chemicals |
Nam Hwa and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Kukdong Oil
The main advantage of trading using opposite Nam Hwa and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| Nam Hwa vs. Silicon2 Co | Nam Hwa vs. Coloray International Investment | Nam Hwa vs. NewFlex Technology Co | Nam Hwa vs. AeroSpace Technology of |
| Kukdong Oil vs. Sangsangin Investment Securities | Kukdong Oil vs. Ssangyong Materials Corp | Kukdong Oil vs. Golden Bridge Investment | Kukdong Oil vs. EBEST Investment Securities |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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