Correlation Between Kakao Games and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Kakao Games 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 Kakao Games and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kakao Games Corp and Namhwa Industrial Co, you can compare the effects of market volatilities on Kakao Games 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 Kakao Games with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kakao Games and Namhwa Industrial.
Diversification Opportunities for Kakao Games and Namhwa Industrial
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kakao and Namhwa is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kakao Games Corp and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and Kakao Games 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 Kakao Games Corp 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 Kakao Games i.e., Kakao Games and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Kakao Games and Namhwa Industrial
Assuming the 90 days trading horizon Kakao Games Corp is expected to under-perform the Namhwa Industrial. In addition to that, Kakao Games is 1.26 times more volatile than Namhwa Industrial Co. It trades about -0.12 of its total potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.13 per unit of volatility. If you would invest 503,000 in Namhwa Industrial Co on August 24, 2024 and sell it today you would earn a total of 28,000 from holding Namhwa Industrial Co or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kakao Games Corp vs. Namhwa Industrial Co
Performance |
| Timeline |
| Kakao Games Corp |
| Namhwa Industrial |
Kakao Games and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kakao Games and Namhwa Industrial
The main advantage of trading using opposite Kakao Games and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kakao Games 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.| Kakao Games vs. Posco ICT | Kakao Games vs. Devsisters corporation | Kakao Games vs. Konan Technology | Kakao Games vs. Alchera |
| Namhwa Industrial vs. Kakao Games Corp | Namhwa Industrial vs. Duksan Hi Metal | Namhwa Industrial vs. Youngsin Metal Industrial | Namhwa Industrial vs. Dongil Metal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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