Correlation Between Namhwa Industrial and Neungyule Education

Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Neungyule Education 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 Namhwa Industrial and Neungyule Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Namhwa Industrial Co and Neungyule Education, you can compare the effects of market volatilities on Namhwa Industrial and Neungyule Education 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 Namhwa Industrial with a short position of Neungyule Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Neungyule Education.

Diversification Opportunities for Namhwa Industrial and Neungyule Education

-0.03

Correlation Coefficient

Namhwa Industrial  Neungyule Education

Good diversification

The 3 months correlation between Namhwa and Neungyule is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Neungyule Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neungyule Education and Namhwa Industrial 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 Namhwa Industrial Co are associated (or correlated) with Neungyule Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neungyule Education has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Neungyule Education go up and down completely randomly.

Pair Corralation between Namhwa Industrial and Neungyule Education

Assuming the 90 days trading horizon Namhwa Industrial is expected to generate 98.12 times less return on investment than Neungyule Education. But when comparing it to its historical volatility, Namhwa Industrial Co is 2.46 times less risky than Neungyule Education. It trades about 0.0 of its potential returns per unit of risk. Neungyule Education is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  339,500  in Neungyule Education on October 11, 2024 and sell it today you would earn a total of  46,500  from holding Neungyule Education or generate 13.7% return on investment over 90 days.

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

Namhwa Industrial Co  vs.  Neungyule Education

Namhwa Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Namhwa Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namhwa Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Neungyule Education

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Neungyule Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Neungyule Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Namhwa Industrial and Neungyule Education

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

The idea behind Namhwa Industrial Co and Neungyule Education 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.