Correlation Between Nam Hwa and Duksan Hi
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Duksan Hi 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 Duksan Hi 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 Duksan Hi Metal, you can compare the effects of market volatilities on Nam Hwa and Duksan Hi 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 Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Duksan Hi.
Diversification Opportunities for Nam Hwa and Duksan Hi
Good diversification
The 3 months correlation between Nam and Duksan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Nam Hwa i.e., Nam Hwa and Duksan Hi go up and down completely randomly.
Pair Corralation between Nam Hwa and Duksan Hi
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Duksan Hi. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 1.31 times less risky than Duksan Hi. The stock trades about -0.06 of its potential returns per unit of risk. The Duksan Hi Metal is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 541,000 in Duksan Hi Metal on October 16, 2024 and sell it today you would lose (149,500) from holding Duksan Hi Metal or give up 27.63% 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. Duksan Hi Metal
Performance |
| Timeline |
| Nam Hwa Construction |
| Duksan Hi Metal |
Nam Hwa and Duksan Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Duksan Hi
The main advantage of trading using opposite Nam Hwa and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Duksan Hi 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 Duksan Hi will offset losses from the drop in Duksan Hi's long position.The idea behind Nam Hwa Construction and Duksan Hi Metal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Duksan Hi vs. Hanshin Construction Co | Duksan Hi vs. Seohee Construction Co | Duksan Hi vs. Inzi Display CoLtd | Duksan Hi vs. Nam Hwa Construction |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |