Correlation Between Nam Hwa and Jeju Beer
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Jeju Beer 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 Jeju Beer 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 Jeju Beer Co, you can compare the effects of market volatilities on Nam Hwa and Jeju Beer 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 Jeju Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Jeju Beer.
Diversification Opportunities for Nam Hwa and Jeju Beer
Average diversification
The 3 months correlation between Nam and Jeju is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer 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 Jeju Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of Nam Hwa i.e., Nam Hwa and Jeju Beer go up and down completely randomly.
Pair Corralation between Nam Hwa and Jeju Beer
Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 0.55 times more return on investment than Jeju Beer. However, Nam Hwa Construction is 1.83 times less risky than Jeju Beer. It trades about -0.19 of its potential returns per unit of risk. Jeju Beer Co is currently generating about -0.16 per unit of risk. If you would invest 420,867 in Nam Hwa Construction on October 25, 2024 and sell it today you would lose (21,867) from holding Nam Hwa Construction or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Hwa Construction vs. Jeju Beer Co
Performance |
| Timeline |
| Nam Hwa Construction |
| Jeju Beer |
Nam Hwa and Jeju Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Hwa and Jeju Beer
The main advantage of trading using opposite Nam Hwa and Jeju Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Jeju Beer 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 Jeju Beer will offset losses from the drop in Jeju Beer's long position.| Nam Hwa vs. Samsung Electronics Co | Nam Hwa vs. Samsung Electronics Co | Nam Hwa vs. KB Financial Group | Nam Hwa vs. Shinhan Financial Group |
| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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