Correlation Between Narae Nanotech and Home Center
Can any of the company-specific risk be diversified away by investing in both Narae Nanotech and Home Center 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 Narae Nanotech and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Narae Nanotech Corp and Home Center Holdings, you can compare the effects of market volatilities on Narae Nanotech and Home Center 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 Narae Nanotech with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of Narae Nanotech and Home Center.
Diversification Opportunities for Narae Nanotech and Home Center
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Narae and Home is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Narae Nanotech Corp and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and Narae Nanotech 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 Narae Nanotech Corp are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of Narae Nanotech i.e., Narae Nanotech and Home Center go up and down completely randomly.
Pair Corralation between Narae Nanotech and Home Center
Assuming the 90 days trading horizon Narae Nanotech is expected to generate 6.84 times less return on investment than Home Center. But when comparing it to its historical volatility, Narae Nanotech Corp is 1.45 times less risky than Home Center. It trades about 0.03 of its potential returns per unit of risk. Home Center Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 71,352 in Home Center Holdings on October 25, 2024 and sell it today you would earn a total of 27,648 from holding Home Center Holdings or generate 38.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 72.13% |
Values | Daily Returns |
Narae Nanotech Corp vs. Home Center Holdings
Performance |
Timeline |
Narae Nanotech Corp |
Home Center Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Narae Nanotech and Home Center Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Narae Nanotech and Home Center
The main advantage of trading using opposite Narae Nanotech and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Narae Nanotech position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.Narae Nanotech vs. Wireless Power Amplifier | Narae Nanotech vs. Koryo Credit Information | Narae Nanotech vs. Sewoon Medical Co | Narae Nanotech vs. Digital Power Communications |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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