Correlation Between Namhwa Industrial and Osteonic
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Osteonic 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 Osteonic 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 Osteonic Co, you can compare the effects of market volatilities on Namhwa Industrial and Osteonic 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 Osteonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Osteonic.
Diversification Opportunities for Namhwa Industrial and Osteonic
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Namhwa and Osteonic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Osteonic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osteonic 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 Osteonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osteonic has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Osteonic go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Osteonic
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to under-perform the Osteonic. But the stock apears to be less risky and, when comparing its historical volatility, Namhwa Industrial Co is 2.44 times less risky than Osteonic. The stock trades about -0.05 of its potential returns per unit of risk. The Osteonic Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 314,500 in Osteonic Co on September 5, 2024 and sell it today you would earn a total of 199,500 from holding Osteonic Co or generate 63.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Osteonic Co
Performance |
| Timeline |
| Namhwa Industrial |
| Osteonic |
Namhwa Industrial and Osteonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Osteonic
The main advantage of trading using opposite Namhwa Industrial and Osteonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Osteonic 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 Osteonic will offset losses from the drop in Osteonic's long position.| Namhwa Industrial vs. Digital Power Communications | Namhwa Industrial vs. Ssangyong Information Communication | Namhwa Industrial vs. Lotte Data Communication | Namhwa Industrial vs. LG Household Healthcare |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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