Correlation Between Nam Hwa and Fantagio Corp

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

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

Diversification Opportunities for Nam Hwa and Fantagio Corp

-0.24

Correlation Coefficient

Nam Hwa  Fantagio Corp

Very good diversification

The 3 months correlation between Nam and Fantagio is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Fantagio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantagio Corp and Nam Hwa 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 Nam Hwa Construction are associated (or correlated) with Fantagio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantagio Corp has no effect on the direction of Nam Hwa i.e., Nam Hwa and Fantagio Corp go up and down completely randomly.

Pair Corralation between Nam Hwa and Fantagio Corp

Assuming the 90 days trading horizon Nam Hwa Construction is expected to generate 0.9 times more return on investment than Fantagio Corp. However, Nam Hwa Construction is 1.12 times less risky than Fantagio Corp. It trades about 0.04 of its potential returns per unit of risk. Fantagio Corp is currently generating about -0.09 per unit of risk. If you would invest  428,000  in Nam Hwa Construction on September 18, 2024 and sell it today you would earn a total of  5,500  from holding Nam Hwa Construction or generate 1.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nam Hwa Construction  vs.  Fantagio Corp

Nam Hwa Construction

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nam Hwa Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nam Hwa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fantagio Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fantagio Corp 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nam Hwa and Fantagio Corp

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

The idea behind Nam Hwa Construction and Fantagio Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .