Correlation Between Narae Nanotech and RFTech
Can any of the company-specific risk be diversified away by investing in both Narae Nanotech and RFTech 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 Narae Nanotech and RFTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Narae Nanotech Corp and RFTech Co, you can compare the effects of market volatilities on Narae Nanotech and RFTech 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 Narae Nanotech with a short position of RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Narae Nanotech and RFTech.
Diversification Opportunities for Narae Nanotech and RFTech
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Narae and RFTech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Narae Nanotech Corp and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Narae Nanotech 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 Narae Nanotech Corp are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Narae Nanotech i.e., Narae Nanotech and RFTech go up and down completely randomly.
Pair Corralation between Narae Nanotech and RFTech
Assuming the 90 days trading horizon Narae Nanotech Corp is expected to under-perform the RFTech. In addition to that, Narae Nanotech is 2.17 times more volatile than RFTech Co. It trades about -0.24 of its total potential returns per unit of risk. RFTech Co is currently generating about -0.16 per unit of volatility. If you would invest 385,500 in RFTech Co on October 21, 2024 and sell it today you would lose (24,500) from holding RFTech Co or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Narae Nanotech Corp vs. RFTech Co
Performance |
| Timeline |
| Narae Nanotech Corp |
| RFTech |
Narae Nanotech and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Narae Nanotech and RFTech
The main advantage of trading using opposite Narae Nanotech and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Narae Nanotech position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.| Narae Nanotech vs. Hanjin Transportation Co | Narae Nanotech vs. Daejoo Electronic Materials | Narae Nanotech vs. Moadata Co | Narae Nanotech vs. System and Application |
| RFTech vs. Hanwha Life Insurance | RFTech vs. Daishin Information Communications | RFTech vs. SK Telecom Co | RFTech vs. CKH Food Health |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |