Correlation Between Solus Advanced and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Solus Advanced 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 Solus Advanced and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solus Advanced Materials and Nam Hwa Construction, you can compare the effects of market volatilities on Solus Advanced 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 Solus Advanced with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solus Advanced and Nam Hwa.
Diversification Opportunities for Solus Advanced and Nam Hwa
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solus and Nam is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Solus Advanced Materials 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 Solus 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 Solus Advanced Materials 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 Solus Advanced i.e., Solus Advanced and Nam Hwa go up and down completely randomly.
Pair Corralation between Solus Advanced and Nam Hwa
Assuming the 90 days trading horizon Solus Advanced Materials is expected to generate 1.6 times more return on investment than Nam Hwa. However, Solus Advanced is 1.6 times more volatile than Nam Hwa Construction. It trades about 0.1 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.1 per unit of risk. If you would invest 864,000 in Solus Advanced Materials on October 12, 2024 and sell it today you would earn a total of 46,000 from holding Solus Advanced Materials or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solus Advanced Materials vs. Nam Hwa Construction
Performance |
| Timeline |
| Solus Advanced Materials |
| Nam Hwa Construction |
Solus Advanced and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solus Advanced and Nam Hwa
The main advantage of trading using opposite Solus Advanced and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus Advanced 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.| Solus Advanced vs. Jeju Semiconductor Corp | Solus Advanced vs. Leaders Technology Investment | Solus Advanced vs. DB Insurance Co | Solus Advanced vs. KTB Investment Securities |
| Nam Hwa vs. PI Advanced Materials | Nam Hwa vs. Solus Advanced Materials | Nam Hwa vs. Daejoo Electronic Materials | Nam Hwa vs. PJ 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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