Correlation Between INtRON Biotechnology and Nam Hwa

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

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

Diversification Opportunities for INtRON Biotechnology and Nam Hwa

0.41

Correlation Coefficient

INtRON Biotechnology  Nam Hwa

Very weak diversification

The 3 months correlation between INtRON and Nam is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding iNtRON Biotechnology 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 INtRON Biotechnology 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 iNtRON Biotechnology 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 INtRON Biotechnology i.e., INtRON Biotechnology and Nam Hwa go up and down completely randomly.

Pair Corralation between INtRON Biotechnology and Nam Hwa

Assuming the 90 days trading horizon iNtRON Biotechnology is expected to under-perform the Nam Hwa. In addition to that, INtRON Biotechnology is 1.71 times more volatile than Nam Hwa Construction. It trades about -0.23 of its total potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.12 per unit of volatility. If you would invest  427,783  in Nam Hwa Construction on December 22, 2024 and sell it today you would lose (45,783) from holding Nam Hwa Construction or give up 10.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

iNtRON Biotechnology  vs.  Nam Hwa Construction

iNtRON Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days iNtRON Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing 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 INtRON Biotechnology and Nam Hwa

The main advantage of trading using opposite INtRON Biotechnology and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INtRON Biotechnology 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 iNtRON Biotechnology 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.