Correlation Between NH Investment and Guyoung Technology

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

By analyzing existing cross correlation between NH Investment Securities and Guyoung Technology Co, you can compare the effects of market volatilities on NH Investment and Guyoung 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 NH Investment with a short position of Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Guyoung Technology.

Diversification Opportunities for NH Investment and Guyoung Technology

0.74

Correlation Coefficient

NH Investment  Guyoung Technology

Poor diversification

The 3 months correlation between 005940 and Guyoung is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology and NH Investment 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 NH Investment Securities are associated (or correlated) with Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of NH Investment i.e., NH Investment and Guyoung Technology go up and down completely randomly.

Pair Corralation between NH Investment and Guyoung Technology

Assuming the 90 days trading horizon NH Investment is expected to generate 2.08 times less return on investment than Guyoung Technology. But when comparing it to its historical volatility, NH Investment Securities is 1.62 times less risky than Guyoung Technology. It trades about 0.1 of its potential returns per unit of risk. Guyoung Technology Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  197,400  in Guyoung Technology Co on December 27, 2024 and sell it today you would earn a total of  30,600  from holding Guyoung Technology Co or generate 15.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NH Investment Securities  vs.  Guyoung Technology Co

NH Investment Securities

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NH Investment Securities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NH Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guyoung Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guyoung Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guyoung Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NH Investment and Guyoung Technology

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

The idea behind NH Investment Securities and Guyoung Technology Co 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.