Correlation Between Namhwa Industrial and Samhwa Paint
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Samhwa Paint 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 Namhwa Industrial and Samhwa Paint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhwa Industrial Co and Samhwa Paint Industrial, you can compare the effects of market volatilities on Namhwa Industrial and Samhwa Paint 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 Namhwa Industrial with a short position of Samhwa Paint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Samhwa Paint.
Diversification Opportunities for Namhwa Industrial and Samhwa Paint
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Namhwa and Samhwa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Samhwa Paint Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhwa Paint Industrial and Namhwa Industrial 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 Namhwa Industrial Co are associated (or correlated) with Samhwa Paint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhwa Paint Industrial has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Samhwa Paint go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Samhwa Paint
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 0.85 times more return on investment than Samhwa Paint. However, Namhwa Industrial Co is 1.18 times less risky than Samhwa Paint. It trades about 0.07 of its potential returns per unit of risk. Samhwa Paint Industrial is currently generating about -0.19 per unit of risk. If you would invest 534,000 in Namhwa Industrial Co on August 30, 2024 and sell it today you would earn a total of 13,000 from holding Namhwa Industrial Co or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Samhwa Paint Industrial
Performance |
| Timeline |
| Namhwa Industrial |
| Samhwa Paint Industrial |
Namhwa Industrial and Samhwa Paint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Samhwa Paint
The main advantage of trading using opposite Namhwa Industrial and Samhwa Paint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Samhwa Paint 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 Samhwa Paint will offset losses from the drop in Samhwa Paint's long position.| Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Shinhan WTI Futures | Namhwa Industrial vs. Finebesteel |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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