Correlation Between SK Square and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both SK Square and Namhae Chemical 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 SK Square and Namhae Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Square Co and Namhae Chemical, you can compare the effects of market volatilities on SK Square and Namhae Chemical 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 SK Square with a short position of Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Square and Namhae Chemical.
Diversification Opportunities for SK Square and Namhae Chemical
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 402340 and Namhae is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SK Square Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and SK Square 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 SK Square Co are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of SK Square i.e., SK Square and Namhae Chemical go up and down completely randomly.
Pair Corralation between SK Square and Namhae Chemical
Assuming the 90 days trading horizon SK Square Co is expected to generate 3.57 times more return on investment than Namhae Chemical. However, SK Square is 3.57 times more volatile than Namhae Chemical. It trades about 0.07 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.06 per unit of risk. If you would invest 5,010,000 in SK Square Co on September 12, 2024 and sell it today you would earn a total of 2,810,000 from holding SK Square Co or generate 56.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Square Co vs. Namhae Chemical
Performance |
| Timeline |
| SK Square |
| Namhae Chemical |
SK Square and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Square and Namhae Chemical
The main advantage of trading using opposite SK Square and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Square position performs unexpectedly, Namhae Chemical 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| SK Square vs. Busan Industrial Co | SK Square vs. Busan Ind | SK Square vs. Mirae Asset Daewoo | SK Square vs. Shinhan WTI Futures |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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