Correlation Between Namhwa Industrial and Danal
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Danal 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 Danal 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 Danal Co, you can compare the effects of market volatilities on Namhwa Industrial and Danal 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 Danal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Danal.
Diversification Opportunities for Namhwa Industrial and Danal
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Namhwa and Danal is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Danal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danal 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 Danal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danal has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Danal go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Danal
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to under-perform the Danal. In addition to that, Namhwa Industrial is 1.03 times more volatile than Danal Co. It trades about -0.09 of its total potential returns per unit of risk. Danal Co is currently generating about -0.04 per unit of volatility. If you would invest 308,000 in Danal Co on September 2, 2024 and sell it today you would lose (6,500) from holding Danal Co or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Danal Co
Performance |
| Timeline |
| Namhwa Industrial |
| Danal |
Namhwa Industrial and Danal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Danal
The main advantage of trading using opposite Namhwa Industrial and Danal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Danal 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 Danal will offset losses from the drop in Danal's long position.| Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial vs. Mirae Asset Daewoo | Namhwa Industrial vs. Finebesteel |
| Danal vs. Namhwa Industrial Co | Danal vs. Kumho Industrial Co | Danal vs. Sejong Industrial | Danal vs. Daiyang Metal Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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