Correlation Between Namhwa Industrial and Daedong Metals
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Daedong Metals 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 Daedong Metals 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 Daedong Metals Co, you can compare the effects of market volatilities on Namhwa Industrial and Daedong Metals 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 Daedong Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Daedong Metals.
Diversification Opportunities for Namhwa Industrial and Daedong Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhwa and Daedong is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Daedong Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Metals 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 Daedong Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Metals has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Daedong Metals go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Daedong Metals
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to under-perform the Daedong Metals. But the stock apears to be less risky and, when comparing its historical volatility, Namhwa Industrial Co is 3.06 times less risky than Daedong Metals. The stock trades about -0.04 of its potential returns per unit of risk. The Daedong Metals Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 848,261 in Daedong Metals Co on August 24, 2024 and sell it today you would lose (48,261) from holding Daedong Metals Co or give up 5.69% 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. Daedong Metals Co
Performance |
| Timeline |
| Namhwa Industrial |
| Daedong Metals |
Namhwa Industrial and Daedong Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Daedong Metals
The main advantage of trading using opposite Namhwa Industrial and Daedong Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Daedong Metals 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 Daedong Metals will offset losses from the drop in Daedong Metals' long position.| Namhwa Industrial vs. Kakao Games Corp | Namhwa Industrial vs. Duksan Hi Metal | Namhwa Industrial vs. Youngsin Metal Industrial | Namhwa Industrial vs. Dongil Metal Co |
| Daedong Metals vs. DB Financial Investment | Daedong Metals vs. Jinro Distillers Co | Daedong Metals vs. Aprogen Healthcare Games | Daedong Metals vs. SBI Investment KOREA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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