Correlation Between SEOJEON ELECTRIC and Nam Hwa

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SEOJEON ELECTRIC and Nam Hwa 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 SEOJEON ELECTRIC and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEOJEON ELECTRIC MACHINERY and Nam Hwa Construction, you can compare the effects of market volatilities on SEOJEON ELECTRIC and Nam Hwa 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 SEOJEON ELECTRIC with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOJEON ELECTRIC and Nam Hwa.

Diversification Opportunities for SEOJEON ELECTRIC and Nam Hwa

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between SEOJEON and Nam is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SEOJEON ELECTRIC MACHINERY and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of SEOJEON ELECTRIC i.e., SEOJEON ELECTRIC and Nam Hwa go up and down completely randomly.

Pair Corralation between SEOJEON ELECTRIC and Nam Hwa

Assuming the 90 days trading horizon SEOJEON ELECTRIC MACHINERY is expected to under-perform the Nam Hwa. In addition to that, SEOJEON ELECTRIC is 2.56 times more volatile than Nam Hwa Construction. It trades about -0.15 of its total potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.12 per unit of volatility. If you would invest  408,500  in Nam Hwa Construction on September 26, 2024 and sell it today you would earn a total of  17,500  from holding Nam Hwa Construction or generate 4.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SEOJEON ELECTRIC MACHINERY  vs.  Nam Hwa Construction

 Performance 
       Timeline  
SEOJEON ELECTRIC MAC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEOJEON ELECTRIC MACHINERY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Nam Hwa Construction 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nam Hwa Construction are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nam Hwa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SEOJEON ELECTRIC and Nam Hwa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SEOJEON ELECTRIC and Nam Hwa

The main advantage of trading using opposite SEOJEON ELECTRIC and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEOJEON ELECTRIC position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.
The idea behind SEOJEON ELECTRIC MACHINERY and Nam Hwa Construction 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 Global Correlations module to find global opportunities by holding instruments from different markets.

Other Complementary Tools

Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance