Correlation Between Narae Nanotech and Suprema

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

Diversification Opportunities for Narae Nanotech and Suprema

-0.06

Correlation Coefficient

Narae Nanotech  Suprema

Good diversification

The 3 months correlation between Narae and Suprema is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Narae Nanotech Corp and Suprema in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suprema 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 Suprema. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suprema has no effect on the direction of Narae Nanotech i.e., Narae Nanotech and Suprema go up and down completely randomly.

Pair Corralation between Narae Nanotech and Suprema

Assuming the 90 days trading horizon Narae Nanotech Corp is expected to under-perform the Suprema. In addition to that, Narae Nanotech is 2.1 times more volatile than Suprema. It trades about -0.01 of its total potential returns per unit of risk. Suprema is currently generating about 0.18 per unit of volatility. If you would invest  2,385,000  in Suprema on December 4, 2024 and sell it today you would earn a total of  415,000  from holding Suprema or generate 17.4% return on investment over 90 days.

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

Narae Nanotech Corp  vs.  Suprema

Narae Nanotech Corp

Risk-Adjusted Performance

Very Weak

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

Suprema

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suprema are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suprema sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Narae Nanotech and Suprema

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

The idea behind Narae Nanotech Corp and Suprema 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.