Correlation Between Organic Special and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Organic Special and Namyang Dairy 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 Organic Special and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Organic Special Pet and Namyang Dairy, you can compare the effects of market volatilities on Organic Special and Namyang Dairy 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 Organic Special with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Organic Special and Namyang Dairy.
Diversification Opportunities for Organic Special and Namyang Dairy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Organic and Namyang is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Organic Special Pet and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and Organic Special 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 Organic Special Pet are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Organic Special i.e., Organic Special and Namyang Dairy go up and down completely randomly.
Pair Corralation between Organic Special and Namyang Dairy
Assuming the 90 days trading horizon Organic Special Pet is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Organic Special Pet is 1.15 times less risky than Namyang Dairy. The stock trades about -0.18 of its potential returns per unit of risk. The Namyang Dairy is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 6,320,000 in Namyang Dairy on October 12, 2024 and sell it today you would lose (220,000) from holding Namyang Dairy or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Organic Special Pet vs. Namyang Dairy
Performance |
| Timeline |
| Organic Special Pet |
| Namyang Dairy |
Organic Special and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Organic Special and Namyang Dairy
The main advantage of trading using opposite Organic Special and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Organic Special position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Organic Special vs. TOPMATERIAL LTD | Organic Special vs. T3 Entertainment Co | Organic Special vs. Hanjin Transportation Co | Organic Special vs. Hana Materials |
| Namyang Dairy vs. KakaoBank Corp | Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Hankuk Steel Wire | Namyang Dairy vs. INSUN Environmental New |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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