Correlation Between Nam Hwa and Rorze Systems
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Rorze Systems 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 Rorze Systems 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 Rorze Systems, you can compare the effects of market volatilities on Nam Hwa and Rorze Systems 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 Rorze Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Rorze Systems.
Diversification Opportunities for Nam Hwa and Rorze Systems
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nam and Rorze is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Rorze Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rorze Systems 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 Rorze Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rorze Systems has no effect on the direction of Nam Hwa i.e., Nam Hwa and Rorze Systems go up and down completely randomly.
Pair Corralation between Nam Hwa and Rorze Systems
Assuming the 90 days trading horizon Nam Hwa is expected to generate 7.05 times less return on investment than Rorze Systems. But when comparing it to its historical volatility, Nam Hwa Construction is 3.69 times less risky than Rorze Systems. It trades about 0.02 of its potential returns per unit of risk. Rorze Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,709,000 in Rorze Systems on November 3, 2024 and sell it today you would earn a total of 22,000 from holding Rorze Systems or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. Rorze Systems
Performance |
| Timeline |
| Nam Hwa Construction |
| Rorze Systems |
Nam Hwa and Rorze Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Rorze Systems
The main advantage of trading using opposite Nam Hwa and Rorze Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Rorze Systems 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 Rorze Systems will offset losses from the drop in Rorze Systems' long position.| Nam Hwa vs. DSC Investment | Nam Hwa vs. Jahwa Electronics Co | Nam Hwa vs. DAEDUCK ELECTRONICS CoLtd | Nam Hwa vs. Daejoo Electronic Materials |
| Rorze Systems vs. TS Investment Corp | Rorze Systems vs. Daol Investment Securities | Rorze Systems vs. Golden Bridge Investment | Rorze Systems vs. Hanjoo Light 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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