Correlation Between Namhwa Industrial and CBI
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and CBI 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 CBI 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 CBI Co, you can compare the effects of market volatilities on Namhwa Industrial and CBI 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 CBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and CBI.
Diversification Opportunities for Namhwa Industrial and CBI
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namhwa and CBI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and CBI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBI Co 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 CBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBI Co has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and CBI go up and down completely randomly.
Pair Corralation between Namhwa Industrial and CBI
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 1.11 times more return on investment than CBI. However, Namhwa Industrial is 1.11 times more volatile than CBI Co. It trades about 0.04 of its potential returns per unit of risk. CBI Co is currently generating about -0.49 per unit of risk. If you would invest 534,000 in Namhwa Industrial Co on August 28, 2024 and sell it today you would earn a total of 6,000 from holding Namhwa Industrial Co or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. CBI Co
Performance |
| Timeline |
| Namhwa Industrial |
| CBI Co |
Namhwa Industrial and CBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and CBI
The main advantage of trading using opposite Namhwa Industrial and CBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, CBI 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 CBI will offset losses from the drop in CBI's long position.| Namhwa Industrial vs. SBI Investment KOREA | Namhwa Industrial vs. Nh Investment And | Namhwa Industrial vs. Kukil Metal Co | Namhwa Industrial vs. DONGKUK TED METAL |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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