Correlation Between Namyang Dairy and HB Technology

Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and HB Technology 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 Namyang Dairy and HB Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Namyang Dairy Products and HB Technology TD, you can compare the effects of market volatilities on Namyang Dairy and HB Technology 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 Namyang Dairy with a short position of HB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and HB Technology.

Diversification Opportunities for Namyang Dairy and HB Technology

-0.7

Correlation Coefficient

Namyang Dairy  HB Technology

Excellent diversification

The 3 months correlation between Namyang and 078150 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy Products and HB Technology TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HB Technology TD and Namyang Dairy 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 Namyang Dairy Products are associated (or correlated) with HB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HB Technology TD has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and HB Technology go up and down completely randomly.

Pair Corralation between Namyang Dairy and HB Technology

Assuming the 90 days trading horizon Namyang Dairy Products is expected to generate 12.94 times more return on investment than HB Technology. However, Namyang Dairy is 12.94 times more volatile than HB Technology TD. It trades about 0.06 of its potential returns per unit of risk. HB Technology TD is currently generating about 0.02 per unit of risk. If you would invest  5,969,778  in Namyang Dairy Products on October 9, 2024 and sell it today you would earn a total of  230,222  from holding Namyang Dairy Products or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.65%
Values	Daily Returns

Namyang Dairy Products  vs.  HB Technology TD

Namyang Dairy Products

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Namyang Dairy Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namyang Dairy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HB Technology TD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HB Technology TD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Namyang Dairy and HB Technology

The main advantage of trading using opposite Namyang Dairy and HB Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, HB Technology 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 HB Technology will offset losses from the drop in HB Technology's long position.

The idea behind Namyang Dairy Products and HB Technology TD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.