Correlation Between Nasmedia and Hana Technology
Can any of the company-specific risk be diversified away by investing in both Nasmedia and Hana 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 Nasmedia and Hana Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Hana Technology Co, you can compare the effects of market volatilities on Nasmedia and Hana 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 Nasmedia with a short position of Hana Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Hana Technology.
Diversification Opportunities for Nasmedia and Hana Technology
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasmedia and Hana is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Hana Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Technology and Nasmedia 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 Nasmedia Co are associated (or correlated) with Hana Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Technology has no effect on the direction of Nasmedia i.e., Nasmedia and Hana Technology go up and down completely randomly.
Pair Corralation between Nasmedia and Hana Technology
Assuming the 90 days trading horizon Nasmedia Co is expected to generate 0.38 times more return on investment than Hana Technology. However, Nasmedia Co is 2.64 times less risky than Hana Technology. It trades about -0.05 of its potential returns per unit of risk. Hana Technology Co is currently generating about -0.14 per unit of risk. If you would invest 1,539,000 in Nasmedia Co on September 15, 2024 and sell it today you would lose (75,000) from holding Nasmedia Co or give up 4.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nasmedia Co vs. Hana Technology Co
Performance |
Timeline |
Nasmedia |
Hana Technology |
Nasmedia and Hana Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasmedia and Hana Technology
The main advantage of trading using opposite Nasmedia and Hana Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia position performs unexpectedly, Hana 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 Hana Technology will offset losses from the drop in Hana Technology's long position.Nasmedia vs. Hyosung Advanced Materials | Nasmedia vs. LG Chemicals | Nasmedia vs. Korea Petro Chemical | Nasmedia vs. Youngbo Chemical Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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