Correlation Between Namhwa Industrial and Sungmoon Electronics
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Sungmoon Electronics 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 Sungmoon Electronics 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 Sungmoon Electronics Co, you can compare the effects of market volatilities on Namhwa Industrial and Sungmoon Electronics 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 Sungmoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Sungmoon Electronics.
Diversification Opportunities for Namhwa Industrial and Sungmoon Electronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhwa and Sungmoon is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Sungmoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungmoon Electronics 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 Sungmoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungmoon Electronics has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Sungmoon Electronics go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Sungmoon Electronics
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 0.41 times more return on investment than Sungmoon Electronics. However, Namhwa Industrial Co is 2.44 times less risky than Sungmoon Electronics. It trades about -0.04 of its potential returns per unit of risk. Sungmoon Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 612,906 in Namhwa Industrial Co on September 3, 2024 and sell it today you would lose (88,906) from holding Namhwa Industrial Co or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Sungmoon Electronics Co
Performance |
| Timeline |
| Namhwa Industrial |
| Sungmoon Electronics |
Namhwa Industrial and Sungmoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Sungmoon Electronics
The main advantage of trading using opposite Namhwa Industrial and Sungmoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Sungmoon Electronics 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 Sungmoon Electronics will offset losses from the drop in Sungmoon Electronics' 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 |
| Sungmoon Electronics vs. Korea Alcohol Industrial | Sungmoon Electronics vs. Jinro Distillers Co | Sungmoon Electronics vs. Taeyang Metal Industrial | Sungmoon Electronics vs. Heungkuk Metaltech CoLtd |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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