Correlation Between Nable Communications and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Nable Communications and Seoul Food 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 Nable Communications and Seoul Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and Seoul Food Industrial, you can compare the effects of market volatilities on Nable Communications and Seoul Food 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 Nable Communications with a short position of Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and Seoul Food.
Diversification Opportunities for Nable Communications and Seoul Food
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nable and Seoul is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial and Nable Communications 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 Nable Communications are associated (or correlated) with Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Nable Communications i.e., Nable Communications and Seoul Food go up and down completely randomly.
Pair Corralation between Nable Communications and Seoul Food
Assuming the 90 days trading horizon Nable Communications is expected to generate 1.26 times more return on investment than Seoul Food. However, Nable Communications is 1.26 times more volatile than Seoul Food Industrial. It trades about -0.01 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.05 per unit of risk. If you would invest 775,000 in Nable Communications on October 25, 2024 and sell it today you would lose (133,000) from holding Nable Communications or give up 17.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nable Communications vs. Seoul Food Industrial
Performance |
| Timeline |
| Nable Communications |
| Seoul Food Industrial |
Nable Communications and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nable Communications and Seoul Food
The main advantage of trading using opposite Nable Communications and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Nable Communications vs. Shinsegae Food | Nable Communications vs. Korea Air Svc | Nable Communications vs. Hanjoo Light Metal | Nable Communications vs. Jin Air Co |
| Seoul Food vs. KB Financial Group | Seoul Food vs. Shinhan Financial Group | Seoul Food vs. Hana Financial | Seoul Food vs. Woori Financial Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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