Correlation Between HS Valve and Namhae Chemical

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

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

Diversification Opportunities for HS Valve and Namhae Chemical

0.09

Correlation Coefficient

HS Valve  Namhae Chemical

Significant diversification

The 3 months correlation between 039610 and Namhae is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HS Valve Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and HS Valve 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 HS Valve 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 HS Valve i.e., HS Valve and Namhae Chemical go up and down completely randomly.

Pair Corralation between HS Valve and Namhae Chemical

Assuming the 90 days trading horizon HS Valve Co is expected to generate 5.52 times more return on investment than Namhae Chemical. However, HS Valve is 5.52 times more volatile than Namhae Chemical. It trades about 0.1 of its potential returns per unit of risk. Namhae Chemical is currently generating about 0.11 per unit of risk. If you would invest  739,000  in HS Valve Co on December 29, 2024 and sell it today you would earn a total of  215,000  from holding HS Valve Co or generate 29.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

HS Valve Co  vs.  Namhae Chemical

HS Valve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HS Valve Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HS Valve sustained solid returns over the last few months and may actually be approaching a breakup point.

Namhae Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Namhae Chemical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namhae Chemical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HS Valve and Namhae Chemical

The main advantage of trading using opposite HS Valve and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HS Valve 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.

The idea behind HS Valve Co and Namhae Chemical 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.