Correlation Between Nam Hwa and Dongkuk Structures
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Dongkuk Structures 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 Dongkuk Structures 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 Dongkuk Structures Construction, you can compare the effects of market volatilities on Nam Hwa and Dongkuk Structures 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 Dongkuk Structures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Dongkuk Structures.
Diversification Opportunities for Nam Hwa and Dongkuk Structures
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nam and Dongkuk is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Dongkuk Structures Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Structures 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 Dongkuk Structures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Structures has no effect on the direction of Nam Hwa i.e., Nam Hwa and Dongkuk Structures go up and down completely randomly.
Pair Corralation between Nam Hwa and Dongkuk Structures
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Dongkuk Structures. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 1.14 times less risky than Dongkuk Structures. The stock trades about -0.22 of its potential returns per unit of risk. The Dongkuk Structures Construction is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 243,500 in Dongkuk Structures Construction on October 24, 2024 and sell it today you would lose (10,000) from holding Dongkuk Structures Construction or give up 4.11% 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. Dongkuk Structures Constructio
Performance |
| Timeline |
| Nam Hwa Construction |
| Dongkuk Structures |
Nam Hwa and Dongkuk Structures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Dongkuk Structures
The main advantage of trading using opposite Nam Hwa and Dongkuk Structures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Dongkuk Structures 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 Dongkuk Structures will offset losses from the drop in Dongkuk Structures' long position.| Nam Hwa vs. KB Financial Group | Nam Hwa vs. ITM Semiconductor Co | Nam Hwa vs. Lotte Data Communication | Nam Hwa vs. Incar Financial Service |
| Dongkuk Structures vs. Nam Hwa Construction | Dongkuk Structures vs. Hanshin Construction Co | Dongkuk Structures vs. ABOV Semiconductor Co | Dongkuk Structures vs. Hanmi Semiconductor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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