Correlation Between Global Standard and NH Investment
Can any of the company-specific risk be diversified away by investing in both Global Standard and NH Investment 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 Global Standard and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and NH Investment Securities, you can compare the effects of market volatilities on Global Standard and NH Investment 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 Global Standard with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and NH Investment.
Diversification Opportunities for Global Standard and NH Investment
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and 005940 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Global Standard 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 Global Standard Technology are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Global Standard i.e., Global Standard and NH Investment go up and down completely randomly.
Pair Corralation between Global Standard and NH Investment
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 2.32 times more return on investment than NH Investment. However, Global Standard is 2.32 times more volatile than NH Investment Securities. It trades about 0.08 of its potential returns per unit of risk. NH Investment Securities is currently generating about 0.13 per unit of risk. If you would invest 1,674,000 in Global Standard Technology on December 29, 2024 and sell it today you would earn a total of 222,000 from holding Global Standard Technology or generate 13.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Global Standard Technology vs. NH Investment Securities
Performance |
Timeline |
Global Standard Tech |
NH Investment Securities |
Global Standard and NH Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Standard and NH Investment
The main advantage of trading using opposite Global Standard and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.Global Standard vs. Digital Power Communications | Global Standard vs. Hyosung Advanced Materials | Global Standard vs. Kisan Telecom Co | Global Standard vs. Samlip General Foods |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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