Correlation Between JC Chemical and Namhae Chemical

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Can any of the company-specific risk be diversified away by investing in both JC Chemical and Namhae Chemical 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 JC Chemical and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JC Chemical Co and Namhae Chemical, you can compare the effects of market volatilities on JC Chemical and Namhae Chemical 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 JC Chemical with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Chemical and Namhae Chemical.

Diversification Opportunities for JC Chemical and Namhae Chemical

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between 137950 and Namhae is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding JC Chemical Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and JC 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 JC Chemical Co are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of JC Chemical i.e., JC Chemical and Namhae Chemical go up and down completely randomly.

Pair Corralation between JC Chemical and Namhae Chemical

Assuming the 90 days trading horizon JC Chemical Co is expected to generate 1.56 times more return on investment than Namhae Chemical. However, JC Chemical is 1.56 times more volatile than Namhae Chemical. It trades about 0.16 of its potential returns per unit of risk. Namhae Chemical is currently generating about 0.19 per unit of risk. If you would invest  360,500  in JC Chemical Co on November 28, 2024 and sell it today you would earn a total of  17,000  from holding JC Chemical Co or generate 4.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.74%
ValuesDaily Returns

JC Chemical Co  vs.  Namhae Chemical

 Performance 
       Timeline  
JC Chemical 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JC Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JC Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Namhae Chemical 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Namhae Chemical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Namhae Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JC Chemical and Namhae Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JC Chemical and Namhae Chemical

The main advantage of trading using opposite JC Chemical and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JC Chemical position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.
The idea behind JC Chemical Co and Namhae Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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