Correlation Between Woorim Machinery and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Nam Hwa 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 Woorim Machinery and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woorim Machinery Co and Nam Hwa Construction, you can compare the effects of market volatilities on Woorim Machinery and Nam Hwa 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 Woorim Machinery with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Nam Hwa.
Diversification Opportunities for Woorim Machinery and Nam Hwa
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woorim and Nam is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Woorim Machinery 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 Woorim Machinery Co are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Nam Hwa go up and down completely randomly.
Pair Corralation between Woorim Machinery and Nam Hwa
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.46 times more return on investment than Nam Hwa. However, Woorim Machinery is 1.46 times more volatile than Nam Hwa Construction. It trades about 0.0 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.06 per unit of risk. If you would invest 768,191 in Woorim Machinery Co on November 27, 2024 and sell it today you would lose (204,191) from holding Woorim Machinery Co or give up 26.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Nam Hwa Construction
Performance |
| Timeline |
| Woorim Machinery |
| Nam Hwa Construction |
Woorim Machinery and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Nam Hwa
The main advantage of trading using opposite Woorim Machinery and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Sewoon Medical Co | Woorim Machinery vs. DB Financial Investment | Woorim Machinery vs. Green Cross Medical |
| Nam Hwa vs. Silicon2 Co | Nam Hwa vs. Coloray International Investment | Nam Hwa vs. NewFlex Technology Co | Nam Hwa vs. AeroSpace Technology of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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