Correlation Between Hyosung Advanced and Nable Communications
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Nable Communications 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 Hyosung Advanced and Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and Nable Communications, you can compare the effects of market volatilities on Hyosung Advanced and Nable Communications 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 Hyosung Advanced with a short position of Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Nable Communications.
Diversification Opportunities for Hyosung Advanced and Nable Communications
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hyosung and Nable is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications and Hyosung Advanced 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 Hyosung Advanced Materials are associated (or correlated) with Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Nable Communications go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Nable Communications
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Nable Communications. In addition to that, Hyosung Advanced is 2.06 times more volatile than Nable Communications. It trades about -0.1 of its total potential returns per unit of risk. Nable Communications is currently generating about -0.04 per unit of volatility. If you would invest 738,000 in Nable Communications on August 25, 2024 and sell it today you would lose (93,000) from holding Nable Communications or give up 12.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Nable Communications
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Nable Communications |
Hyosung Advanced and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Nable Communications
The main advantage of trading using opposite Hyosung Advanced and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Mirae Asset Daewoo | Hyosung Advanced vs. UNISEM Co |
| Nable Communications vs. SKONEC Entertainment Co | Nable Communications vs. DC Media Co | Nable Communications vs. Hannong Chemicals | Nable Communications vs. Kukdong Oil Chemicals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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