Correlation Between Nam Hwa and DRGEM
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and DRGEM 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 DRGEM 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 DRGEM, you can compare the effects of market volatilities on Nam Hwa and DRGEM 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 DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and DRGEM.
Diversification Opportunities for Nam Hwa and DRGEM
Pay attention - limited upside
The 3 months correlation between Nam and DRGEM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM 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 DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Nam Hwa i.e., Nam Hwa and DRGEM go up and down completely randomly.
Pair Corralation between Nam Hwa and DRGEM
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 1.21 times more return on investment than DRGEM. However, Nam Hwa is 1.21 times more volatile than DRGEM. It trades about -0.03 of its potential returns per unit of risk. DRGEM is currently generating about -0.2 per unit of risk. If you would invest 459,500 in Nam Hwa Construction on September 12, 2024 and sell it today you would lose (50,000) from holding Nam Hwa Construction or give up 10.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. DRGEM
Performance |
| Timeline |
| Nam Hwa Construction |
| DRGEM |
Nam Hwa and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and DRGEM
The main advantage of trading using opposite Nam Hwa and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Nam Hwa vs. Korea New Network | Nam Hwa vs. Solution Advanced Technology | Nam Hwa vs. Busan Industrial Co | Nam Hwa vs. Busan Ind |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges |