Correlation Between Nam Hwa and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Nam Hwa and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Namhwa Industrial.
Diversification Opportunities for Nam Hwa and Namhwa Industrial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nam and Namhwa is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Nam Hwa i.e., Nam Hwa and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Nam Hwa and Namhwa Industrial
Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Namhwa Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Nam Hwa Construction is 2.22 times less risky than Namhwa Industrial. The stock trades about -0.18 of its potential returns per unit of risk. The Namhwa Industrial Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 511,000 in Namhwa Industrial Co on November 7, 2024 and sell it today you would earn a total of 12,000 from holding Namhwa Industrial Co or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Nam Hwa Construction vs. Namhwa Industrial Co
Performance |
| Timeline |
| Nam Hwa Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Namhwa Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nam Hwa and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Namhwa Industrial
The main advantage of trading using opposite Nam Hwa and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Nam Hwa vs. Vina Technology Co | Nam Hwa vs. Polaris Office Corp | Nam Hwa vs. Samick Musical Instruments | Nam Hwa vs. Korea Plasma Technology |
| Namhwa Industrial vs. Woori Technology | Namhwa Industrial vs. Polaris Office Corp | Namhwa Industrial vs. Dongwoon Anatech Co | Namhwa Industrial vs. Vitzro Tech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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