Correlation Between Jin Air and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Jin Air 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 Jin Air and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Nam Hwa Construction, you can compare the effects of market volatilities on Jin Air 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 Jin Air with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Nam Hwa.
Diversification Opportunities for Jin Air and Nam Hwa
Good diversification
The 3 months correlation between Jin and Nam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air Co 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 Jin Air 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 Jin Air Co 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 Jin Air i.e., Jin Air and Nam Hwa go up and down completely randomly.
Pair Corralation between Jin Air and Nam Hwa
Assuming the 90 days trading horizon Jin Air Co is expected to generate 0.73 times more return on investment than Nam Hwa. However, Jin Air Co is 1.37 times less risky than Nam Hwa. It trades about 0.08 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about 0.05 per unit of risk. If you would invest 1,119,000 in Jin Air Co on September 1, 2024 and sell it today you would earn a total of 59,000 from holding Jin Air Co or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jin Air Co vs. Nam Hwa Construction
Performance |
| Timeline |
| Jin Air |
| Nam Hwa Construction |
Jin Air and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jin Air and Nam Hwa
The main advantage of trading using opposite Jin Air and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air 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.| Jin Air vs. LS Materials | Jin Air vs. TOPMATERIAL LTD | Jin Air vs. Aprogen Healthcare Games | Jin Air vs. Netmarble Games Corp |
| Nam Hwa vs. Korea New Network | Nam Hwa vs. ICD Co | Nam Hwa vs. DYPNF CoLtd | Nam Hwa vs. Busan Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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