Correlation Between DRGEM and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both DRGEM 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 DRGEM and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRGEM and Namhwa Industrial Co, you can compare the effects of market volatilities on DRGEM 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 DRGEM with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRGEM and Namhwa Industrial.
Diversification Opportunities for DRGEM and Namhwa Industrial
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DRGEM and Namhwa is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding DRGEM and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and DRGEM 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 DRGEM 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 DRGEM i.e., DRGEM and Namhwa Industrial go up and down completely randomly.
Pair Corralation between DRGEM and Namhwa Industrial
Assuming the 90 days trading horizon DRGEM is expected to under-perform the Namhwa Industrial. In addition to that, DRGEM is 1.19 times more volatile than Namhwa Industrial Co. It trades about -0.11 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about -0.02 per unit of volatility. If you would invest 575,732 in Namhwa Industrial Co on September 4, 2024 and sell it today you would lose (55,732) from holding Namhwa Industrial Co or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRGEM vs. Namhwa Industrial Co
Performance |
| Timeline |
| DRGEM |
| Namhwa Industrial |
DRGEM and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRGEM and Namhwa Industrial
The main advantage of trading using opposite DRGEM and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRGEM 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.| DRGEM vs. Seah Steel Corp | DRGEM vs. Dongbang Ship Machinery | DRGEM vs. Nam Hwa Construction | DRGEM vs. Sempio Foods Co |
| Namhwa Industrial vs. Korea Investment Holdings | Namhwa Industrial vs. Namhae Chemical | Namhwa Industrial vs. Dongnam Chemical Co | Namhwa Industrial vs. Cloud Air CoLtd |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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