Correlation Between Namhwa Industrial and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Hyundai Heavy 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 Hyundai Heavy 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 Hyundai Heavy Industries, you can compare the effects of market volatilities on Namhwa Industrial and Hyundai Heavy 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 Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Hyundai Heavy.
Diversification Opportunities for Namhwa Industrial and Hyundai Heavy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Namhwa and Hyundai is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries 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 Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Hyundai Heavy go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Hyundai Heavy
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to under-perform the Hyundai Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Namhwa Industrial Co is 2.56 times less risky than Hyundai Heavy. The stock trades about -0.07 of its potential returns per unit of risk. The Hyundai Heavy Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 31,100,000 in Hyundai Heavy Industries on November 27, 2024 and sell it today you would lose (1,250,000) from holding Hyundai Heavy Industries or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhwa Industrial Co vs. Hyundai Heavy Industries
Performance |
| Timeline |
| Namhwa Industrial |
| Hyundai Heavy Industries |
Namhwa Industrial and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhwa Industrial and Hyundai Heavy
The main advantage of trading using opposite Namhwa Industrial and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Hyundai Heavy 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 Hyundai Heavy will offset losses from the drop in Hyundai Heavy's long position.| Namhwa Industrial vs. Kaonmedia Co | Namhwa Industrial vs. Nice Information Telecommunication | Namhwa Industrial vs. Lotte Data Communication | Namhwa Industrial vs. TJ media Co |
| Hyundai Heavy vs. InfoBank | Hyundai Heavy vs. EBEST Investment Securities | Hyundai Heavy vs. Koryo Credit Information | Hyundai Heavy vs. Hana Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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