Correlation Between Namhwa Industrial and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Korea Alcohol 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 Korea Alcohol 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 Korea Alcohol Industrial, you can compare the effects of market volatilities on Namhwa Industrial and Korea Alcohol 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 Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Korea Alcohol.
Diversification Opportunities for Namhwa Industrial and Korea Alcohol
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namhwa and Korea is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Korea Alcohol go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Korea Alcohol
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 1.29 times more return on investment than Korea Alcohol. However, Namhwa Industrial is 1.29 times more volatile than Korea Alcohol Industrial. It trades about 0.07 of its potential returns per unit of risk. Korea Alcohol Industrial is currently generating about -0.13 per unit of risk. If you would invest 534,000 in Namhwa Industrial Co on August 29, 2024 and sell it today you would earn a total of 14,000 from holding Namhwa Industrial Co or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Korea Alcohol Industrial
Performance |
| Timeline |
| Namhwa Industrial |
| Korea Alcohol Industrial |
Namhwa Industrial and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Korea Alcohol
The main advantage of trading using opposite Namhwa Industrial and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Korea Alcohol 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 Korea Alcohol will offset losses from the drop in Korea Alcohol's long position.| Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Shinhan WTI Futures | Namhwa Industrial vs. Finebesteel |
| Korea Alcohol vs. Kbi Metal Co | Korea Alcohol vs. Lindeman Asia Investment | Korea Alcohol vs. DB Financial Investment | Korea Alcohol vs. Eugene Investment Securities |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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