Correlation Between Namhwa Industrial and Kakao Games
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Kakao Games 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 Kakao Games 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 Kakao Games Corp, you can compare the effects of market volatilities on Namhwa Industrial and Kakao Games 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 Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Kakao Games.
Diversification Opportunities for Namhwa Industrial and Kakao Games
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Namhwa and Kakao is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp 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 Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Kakao Games go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Kakao Games
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 0.63 times more return on investment than Kakao Games. However, Namhwa Industrial Co is 1.58 times less risky than Kakao Games. It trades about -0.04 of its potential returns per unit of risk. Kakao Games Corp is currently generating about -0.07 per unit of risk. If you would invest 747,663 in Namhwa Industrial Co on August 28, 2024 and sell it today you would lose (199,663) from holding Namhwa Industrial Co or give up 26.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Kakao Games Corp
Performance |
| Timeline |
| Namhwa Industrial |
| Kakao Games Corp |
Namhwa Industrial and Kakao Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Kakao Games
The main advantage of trading using opposite Namhwa Industrial and Kakao Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Kakao Games 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 Kakao Games will offset losses from the drop in Kakao Games' long position.| Namhwa Industrial vs. Tway Air Co | Namhwa Industrial vs. Air Busan Co | Namhwa Industrial vs. Daejoo Electronic Materials | Namhwa Industrial vs. Daeduck Electronics Co |
| Kakao Games vs. Posco ICT | Kakao Games vs. Devsisters corporation | Kakao Games vs. Nice Information Telecommunication | Kakao Games vs. InfoBank |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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