Correlation Between Formetal and NH Investment
Can any of the company-specific risk be diversified away by investing in both Formetal and NH Investment 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 Formetal and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and NH Investment Securities, you can compare the effects of market volatilities on Formetal and NH Investment 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 Formetal with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and NH Investment.
Diversification Opportunities for Formetal and NH Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Formetal and 005940 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Formetal 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 Formetal Co are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Formetal i.e., Formetal and NH Investment go up and down completely randomly.
Pair Corralation between Formetal and NH Investment
Assuming the 90 days trading horizon Formetal Co is expected to generate 4.54 times more return on investment than NH Investment. However, Formetal is 4.54 times more volatile than NH Investment Securities. It trades about 0.26 of its potential returns per unit of risk. NH Investment Securities is currently generating about 0.55 per unit of risk. If you would invest 353,500 in Formetal Co on November 5, 2024 and sell it today you would earn a total of 53,000 from holding Formetal Co or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. NH Investment Securities
Performance |
| Timeline |
| Formetal |
| NH Investment Securities |
Formetal and NH Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and NH Investment
The main advantage of trading using opposite Formetal and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.| Formetal vs. Korea Electronic Certification | Formetal vs. Samyang Foods Co | Formetal vs. Cuckoo Electronics Co | Formetal vs. Vissem Electronics Co |
| NH Investment vs. ABCO Electronics Co | NH Investment vs. Daeduck Electronics Co | NH Investment vs. Cuckoo Electronics Co | NH Investment vs. Korea Information Communications |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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