Correlation Between Namhwa Industrial and Youl Chon
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Youl Chon 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 Youl Chon 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 Youl Chon Chemical, you can compare the effects of market volatilities on Namhwa Industrial and Youl Chon 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 Youl Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Youl Chon.
Diversification Opportunities for Namhwa Industrial and Youl Chon
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Namhwa and Youl is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Youl Chon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youl Chon Chemical 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 Youl Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youl Chon Chemical has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Youl Chon go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Youl Chon
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 0.36 times more return on investment than Youl Chon. However, Namhwa Industrial Co is 2.78 times less risky than Youl Chon. It trades about 0.0 of its potential returns per unit of risk. Youl Chon Chemical is currently generating about -0.09 per unit of risk. If you would invest 533,000 in Namhwa Industrial Co on September 3, 2024 and sell it today you would lose (9,000) from holding Namhwa Industrial Co or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Youl Chon Chemical
Performance |
| Timeline |
| Namhwa Industrial |
| Youl Chon Chemical |
Namhwa Industrial and Youl Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Youl Chon
The main advantage of trading using opposite Namhwa Industrial and Youl Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Youl Chon 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 Youl Chon will offset losses from the drop in Youl Chon's long position.| Namhwa Industrial vs. Polaris Office Corp | Namhwa Industrial vs. Hansol Homedeco Co | Namhwa Industrial vs. Lotte Energy Materials | Namhwa Industrial vs. Daejung Chemicals Metals |
| Youl Chon vs. Daiyang Metal Co | Youl Chon vs. Namhwa Industrial Co | Youl Chon vs. KMH Hitech Co | Youl Chon vs. Asiana Airlines |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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