Correlation Between Nam Hwa and KPX Green
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and KPX Green 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 KPX Green 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 KPX Green Chemical, you can compare the effects of market volatilities on Nam Hwa and KPX Green 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 KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and KPX Green.
Diversification Opportunities for Nam Hwa and KPX Green
Significant diversification
The 3 months correlation between Nam and KPX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Nam Hwa i.e., Nam Hwa and KPX Green go up and down completely randomly.
Pair Corralation between Nam Hwa and KPX Green
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the KPX Green. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 3.03 times less risky than KPX Green. The stock trades about -0.08 of its potential returns per unit of risk. The KPX Green Chemical is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 478,442 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 219,558 from holding KPX Green Chemical or generate 45.89% 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. KPX Green Chemical
Performance |
| Timeline |
| Nam Hwa Construction |
| KPX Green Chemical |
Nam Hwa and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and KPX Green
The main advantage of trading using opposite Nam Hwa and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Nam Hwa vs. Seohee Construction Co | Nam Hwa vs. SEOJEON ELECTRIC MACHINERY | Nam Hwa vs. Hanmi Semiconductor Co | Nam Hwa vs. Semyung Electric Machinery |
| KPX Green vs. CKH Food Health | KPX Green vs. Keyang Electric Machinery | KPX Green vs. Nam Hwa Construction | KPX Green vs. Hanshin Construction Co |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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