Correlation Between Nam Hwa and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both Nam Hwa and Sewoon Medical 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 Sewoon Medical 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 Sewoon Medical Co, you can compare the effects of market volatilities on Nam Hwa and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Hwa and Sewoon Medical.
Diversification Opportunities for Nam Hwa and Sewoon Medical
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nam and Sewoon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nam Hwa Construction and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of Nam Hwa i.e., Nam Hwa and Sewoon Medical go up and down completely randomly.
Pair Corralation between Nam Hwa and Sewoon Medical
Assuming the 90 days trading horizon Nam Hwa is expected to generate 4.65 times less return on investment than Sewoon Medical. In addition to that, Nam Hwa is 1.13 times more volatile than Sewoon Medical Co. It trades about 0.07 of its total potential returns per unit of risk. Sewoon Medical Co is currently generating about 0.37 per unit of volatility. If you would invest 220,133 in Sewoon Medical Co on October 8, 2024 and sell it today you would earn a total of 28,867 from holding Sewoon Medical Co or generate 13.11% 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. Sewoon Medical Co
Performance |
Timeline |
Nam Hwa Construction |
Sewoon Medical |
Nam Hwa and Sewoon Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nam Hwa and Sewoon Medical
The main advantage of trading using opposite Nam Hwa and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Hwa position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical's long position.Nam Hwa vs. Woori Financial Group | Nam Hwa vs. Jb Financial | Nam Hwa vs. Nh Investment And | Nam Hwa vs. Hyundai Heavy Industries |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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