Correlation Between Nam Hwa and Moatech

Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Moatech 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 Moatech 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 Moatech Co, you can compare the effects of market volatilities on Nam Hwa and Moatech 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 Moatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Moatech.

Diversification Opportunities for Nam Hwa and Moatech

-0.18

Correlation Coefficient

Nam Hwa  Moatech

Good diversification

The 3 months correlation between Nam and Moatech is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Moatech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moatech 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 Moatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moatech has no effect on the direction of Nam Hwa i.e., Nam Hwa and Moatech go up and down completely randomly.

Pair Corralation between Nam Hwa and Moatech

Assuming the 90 days trading horizon Nam Hwa Construction is expected to under-perform the Moatech. In addition to that, Nam Hwa is 1.35 times more volatile than Moatech Co. It trades about -0.1 of its total potential returns per unit of risk. Moatech Co is currently generating about -0.09 per unit of volatility. If you would invest  289,500  in Moatech Co on October 12, 2024 and sell it today you would lose (7,000) from holding Moatech Co or give up 2.42% of portfolio value over 90 days.

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

Nam Hwa Construction  vs.  Moatech Co

Nam Hwa Construction

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Nam Hwa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moatech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nam Hwa and Moatech

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

The idea behind Nam Hwa Construction and Moatech Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.