Correlation Between Nam Hwa and SM Culture
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and SM Culture 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 SM Culture 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 SM Culture Contents, you can compare the effects of market volatilities on Nam Hwa and SM Culture 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 SM Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and SM Culture.
Diversification Opportunities for Nam Hwa and SM Culture
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nam and 048550 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and SM Culture Contents in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Culture Contents 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 SM Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Culture Contents has no effect on the direction of Nam Hwa i.e., Nam Hwa and SM Culture go up and down completely randomly.
Pair Corralation between Nam Hwa and SM Culture
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 0.65 times more return on investment than SM Culture. However, Nam Hwa Construction is 1.53 times less risky than SM Culture. It trades about -0.1 of its potential returns per unit of risk. SM Culture Contents is currently generating about -0.14 per unit of risk. If you would invest 402,000 in Nam Hwa Construction on November 4, 2024 and sell it today you would lose (6,500) from holding Nam Hwa Construction or give up 1.62% 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. SM Culture Contents
Performance |
| Timeline |
| Nam Hwa Construction |
| SM Culture Contents |
Nam Hwa and SM Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and SM Culture
The main advantage of trading using opposite Nam Hwa and SM Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, SM Culture 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 SM Culture will offset losses from the drop in SM Culture's long position.| Nam Hwa vs. CU Medical Systems | Nam Hwa vs. Koryo Credit Information | Nam Hwa vs. Lotte Non Life Insurance | Nam Hwa vs. Hana Financial |
| SM Culture vs. Daejoo Electronic Materials | SM Culture vs. INNOX Advanced Materials | SM Culture vs. Samyung Trading Co | SM Culture vs. Nh Investment And |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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