Correlation Between Moatech and Nam Hwa

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

By analyzing existing cross correlation between Moatech Co and Nam Hwa Construction, you can compare the effects of market volatilities on Moatech and Nam Hwa 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 Moatech with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moatech and Nam Hwa.

Diversification Opportunities for Moatech and Nam Hwa

0.26

Correlation Coefficient

Moatech  Nam Hwa

Modest diversification

The 3 months correlation between Moatech and Nam is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Moatech Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Moatech 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 Moatech Co are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Moatech i.e., Moatech and Nam Hwa go up and down completely randomly.

Pair Corralation between Moatech and Nam Hwa

Assuming the 90 days trading horizon Moatech Co is expected to generate 0.84 times more return on investment than Nam Hwa. However, Moatech Co is 1.2 times less risky than Nam Hwa. It trades about -0.11 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.12 per unit of risk. If you would invest  294,500  in Moatech Co on December 22, 2024 and sell it today you would lose (24,500) from holding Moatech Co or give up 8.32% of portfolio value over 90 days.

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

Moatech Co  vs.  Nam Hwa Construction

Moatech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moatech Co 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.

Nam Hwa Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nam Hwa Construction 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 Moatech and Nam Hwa

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

The idea behind Moatech Co and Nam Hwa Construction 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.