Correlation Between DSC Investment and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both DSC Investment 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 DSC Investment and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Nam Hwa Construction, you can compare the effects of market volatilities on DSC Investment 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 DSC Investment with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Nam Hwa.
Diversification Opportunities for DSC Investment and Nam Hwa
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DSC and Nam is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment 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 DSC Investment 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 DSC Investment 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 DSC Investment i.e., DSC Investment and Nam Hwa go up and down completely randomly.
Pair Corralation between DSC Investment and Nam Hwa
Assuming the 90 days trading horizon DSC Investment is expected to under-perform the Nam Hwa. In addition to that, DSC Investment is 1.33 times more volatile than Nam Hwa Construction. It trades about -0.24 of its total potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.18 per unit of volatility. If you would invest 406,000 in Nam Hwa Construction on November 5, 2024 and sell it today you would lose (10,500) from holding Nam Hwa Construction or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSC Investment vs. Nam Hwa Construction
Performance |
| Timeline |
| DSC Investment |
| Nam Hwa Construction |
DSC Investment and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSC Investment and Nam Hwa
The main advantage of trading using opposite DSC Investment and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment 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.| DSC Investment vs. Hanjin Transportation Co | DSC Investment vs. Taegu Broadcasting | DSC Investment vs. Korea Information Communications | DSC Investment vs. Nable Communications |
| Nam Hwa vs. CU Medical Systems | Nam Hwa vs. Koryo Credit Information | Nam Hwa vs. Lotte Non Life Insurance | Nam Hwa vs. Hana Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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