Correlation Between Namhwa Industrial and GS Retail
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and GS Retail 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 GS Retail 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 GS Retail Co, you can compare the effects of market volatilities on Namhwa Industrial and GS Retail 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 GS Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and GS Retail.
Diversification Opportunities for Namhwa Industrial and GS Retail
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Namhwa and 007070 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and GS Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Retail 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 GS Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Retail has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and GS Retail go up and down completely randomly.
Pair Corralation between Namhwa Industrial and GS Retail
Assuming the 90 days trading horizon Namhwa Industrial is expected to generate 4.06 times less return on investment than GS Retail. But when comparing it to its historical volatility, Namhwa Industrial Co is 1.11 times less risky than GS Retail. It trades about 0.07 of its potential returns per unit of risk. GS Retail Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,080,000 in GS Retail Co on August 30, 2024 and sell it today you would earn a total of 235,000 from holding GS Retail Co or generate 11.3% 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. GS Retail Co
Performance |
| Timeline |
| Namhwa Industrial |
| GS Retail |
Namhwa Industrial and GS Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and GS Retail
The main advantage of trading using opposite Namhwa Industrial and GS Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, GS Retail 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 GS Retail will offset losses from the drop in GS Retail's long position.| Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Shinhan WTI Futures | Namhwa Industrial vs. Finebesteel |
| GS Retail vs. AptaBio Therapeutics | GS Retail vs. Daewoo SBI SPAC | GS Retail vs. Dream Security co | GS Retail 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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