Correlation Between Nam Hwa and Jin Air
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Jin Air 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 Jin Air 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 Jin Air Co, you can compare the effects of market volatilities on Nam Hwa and Jin Air 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 Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Jin Air.
Diversification Opportunities for Nam Hwa and Jin Air
Good diversification
The 3 months correlation between Nam and Jin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Nam Hwa i.e., Nam Hwa and Jin Air go up and down completely randomly.
Pair Corralation between Nam Hwa and Jin Air
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 1.45 times more return on investment than Jin Air. However, Nam Hwa is 1.45 times more volatile than Jin Air Co. It trades about 0.05 of its potential returns per unit of risk. Jin Air Co is currently generating about 0.03 per unit of risk. If you would invest 399,000 in Nam Hwa Construction on September 3, 2024 and sell it today you would earn a total of 11,000 from holding Nam Hwa Construction or generate 2.76% 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. Jin Air Co
Performance |
| Timeline |
| Nam Hwa Construction |
| Jin Air |
Nam Hwa and Jin Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Jin Air
The main advantage of trading using opposite Nam Hwa and Jin Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Jin Air 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 Jin Air will offset losses from the drop in Jin Air's long position.| Nam Hwa vs. LG Display | Nam Hwa vs. Hyundai Motor | Nam Hwa vs. Hyundai Motor Co | Nam Hwa vs. Hyundai Motor Co |
| Jin Air vs. DataSolution | Jin Air vs. Alton Sports CoLtd | Jin Air vs. SCI Information Service | Jin Air vs. Shinsegae Food |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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