Correlation Between National Plastic and Korea Refract
Can any of the company-specific risk be diversified away by investing in both National Plastic and Korea Refract 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 National Plastic and Korea Refract into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and Korea Refract, you can compare the effects of market volatilities on National Plastic and Korea Refract 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 National Plastic with a short position of Korea Refract. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Korea Refract.
Diversification Opportunities for National Plastic and Korea Refract
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Korea is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Korea Refract in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refract and National Plastic 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 National Plastic Co are associated (or correlated) with Korea Refract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refract has no effect on the direction of National Plastic i.e., National Plastic and Korea Refract go up and down completely randomly.
Pair Corralation between National Plastic and Korea Refract
Assuming the 90 days trading horizon National Plastic Co is expected to generate 0.77 times more return on investment than Korea Refract. However, National Plastic Co is 1.3 times less risky than Korea Refract. It trades about -0.04 of its potential returns per unit of risk. Korea Refract is currently generating about -0.08 per unit of risk. If you would invest 296,000 in National Plastic Co on October 9, 2024 and sell it today you would lose (37,500) from holding National Plastic Co or give up 12.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
National Plastic Co vs. Korea Refract
Performance |
Timeline |
National Plastic |
Korea Refract |
National Plastic and Korea Refract Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Plastic and Korea Refract
The main advantage of trading using opposite National Plastic and Korea Refract positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Korea Refract 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 Korea Refract will offset losses from the drop in Korea Refract's long position.National Plastic vs. PJ Metal Co | National Plastic vs. Youngsin Metal Industrial | National Plastic vs. Songwon Industrial Co | National Plastic vs. LG Household Healthcare |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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