Correlation Between Nam Hwa and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Nam Hwa and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Sungchang Autotech.
Diversification Opportunities for Nam Hwa and Sungchang Autotech
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nam and Sungchang is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Nam Hwa i.e., Nam Hwa and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Nam Hwa and Sungchang Autotech
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Sungchang Autotech. In addition to that, Nam Hwa is 1.79 times more volatile than Sungchang Autotech Co. It trades about -0.1 of its total potential returns per unit of risk. Sungchang Autotech Co is currently generating about 0.25 per unit of volatility. If you would invest 353,007 in Sungchang Autotech Co on October 12, 2024 and sell it today you would earn a total of 17,993 from holding Sungchang Autotech Co or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. Sungchang Autotech Co
Performance |
| Timeline |
| Nam Hwa Construction |
| Sungchang Autotech |
Nam Hwa and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Sungchang Autotech
The main advantage of trading using opposite Nam Hwa and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Nam Hwa vs. Daishin Information Communications | Nam Hwa vs. Air Busan Co | Nam Hwa vs. Jeju Air Co | Nam Hwa vs. Jeju Beer Co |
| Sungchang Autotech vs. DB Financial Investment | Sungchang Autotech vs. NH Investment Securities | Sungchang Autotech vs. Daol Investment Securities | Sungchang Autotech 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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