Correlation Between Miwon Chemical and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Namyang Dairy 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 Miwon Chemical and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Namyang Dairy, you can compare the effects of market volatilities on Miwon Chemical and Namyang Dairy 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 Miwon Chemical with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Namyang Dairy.
Diversification Opportunities for Miwon Chemical and Namyang Dairy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Miwon and Namyang is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Namyang Dairy go up and down completely randomly.
Pair Corralation between Miwon Chemical and Namyang Dairy
Assuming the 90 days trading horizon Miwon Chemical is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Miwon Chemical is 127.18 times less risky than Namyang Dairy. The stock trades about -0.06 of its potential returns per unit of risk. The Namyang Dairy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,750,000 in Namyang Dairy on September 30, 2024 and sell it today you would lose (900,000) from holding Namyang Dairy or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Miwon Chemical vs. Namyang Dairy
Performance |
| Timeline |
| Miwon Chemical |
| Namyang Dairy |
Miwon Chemical and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Namyang Dairy
The main advantage of trading using opposite Miwon Chemical and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Miwon Chemical vs. iNtRON Biotechnology | Miwon Chemical vs. Anam Electronics Co | Miwon Chemical vs. Daiyang Metal Co | Miwon Chemical vs. Korea Electronic Certification |
| Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Jb Financial | Namyang Dairy vs. Nh Investment And | Namyang Dairy vs. Kumho Petro Chemical |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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