Correlation Between DSC Investment and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both DSC Investment and Namhwa Industrial 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 Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Namhwa Industrial Co, you can compare the effects of market volatilities on DSC Investment and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Namhwa Industrial.
Diversification Opportunities for DSC Investment and Namhwa Industrial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between DSC and Namhwa is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of DSC Investment i.e., DSC Investment and Namhwa Industrial go up and down completely randomly.
Pair Corralation between DSC Investment and Namhwa Industrial
Assuming the 90 days trading horizon DSC Investment is expected to under-perform the Namhwa Industrial. But the stock apears to be less risky and, when comparing its historical volatility, DSC Investment is 1.73 times less risky than Namhwa Industrial. The stock trades about -0.12 of its potential returns per unit of risk. The Namhwa Industrial Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 513,000 in Namhwa Industrial Co on October 30, 2024 and sell it today you would earn a total of 10,000 from holding Namhwa Industrial Co or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSC Investment vs. Namhwa Industrial Co
Performance |
| Timeline |
| DSC Investment |
| Namhwa Industrial |
DSC Investment and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSC Investment and Namhwa Industrial
The main advantage of trading using opposite DSC Investment and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| DSC Investment vs. Duksan Hi Metal | DSC Investment vs. Kbi Metal Co | DSC Investment vs. Seoyon Topmetal Co | DSC Investment vs. Asiana Airlines |
| Namhwa Industrial vs. Nam Hwa Construction | Namhwa Industrial vs. Seohee Construction Co | Namhwa Industrial vs. PH Tech Co | Namhwa Industrial vs. KMH Hitech Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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