Correlation Between Namhwa Industrial and Booster
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Booster 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 Booster 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 Booster Co, you can compare the effects of market volatilities on Namhwa Industrial and Booster 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 Booster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Booster.
Diversification Opportunities for Namhwa Industrial and Booster
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Namhwa and Booster is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Booster Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booster 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 Booster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booster has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Booster go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Booster
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 1.92 times more return on investment than Booster. However, Namhwa Industrial is 1.92 times more volatile than Booster Co. It trades about 0.08 of its potential returns per unit of risk. Booster Co is currently generating about -0.09 per unit of risk. If you would invest 519,888 in Namhwa Industrial Co on October 25, 2024 and sell it today you would earn a total of 12,112 from holding Namhwa Industrial Co or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Booster Co
Performance |
| Timeline |
| Namhwa Industrial |
| Booster |
Namhwa Industrial and Booster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Booster
The main advantage of trading using opposite Namhwa Industrial and Booster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Booster 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 Booster will offset losses from the drop in Booster's long position.| Namhwa Industrial vs. LG Chemicals | Namhwa Industrial vs. Iljin Display | Namhwa Industrial vs. LG Display Co | Namhwa Industrial vs. Taegu Broadcasting |
| Booster vs. Pan Entertainment Co | Booster vs. Nasmedia Co | Booster vs. ABOV Semiconductor Co | Booster vs. YG Entertainment |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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