Correlation Between Heungkuk Metaltech and Nable Communications

Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and Nable Communications 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 Heungkuk Metaltech and Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and Nable Communications, you can compare the effects of market volatilities on Heungkuk Metaltech and Nable Communications 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 Heungkuk Metaltech with a short position of Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Nable Communications.

Diversification Opportunities for Heungkuk Metaltech and Nable Communications

0.69

Correlation Coefficient

Heungkuk Metaltech  Nable Communications

Poor diversification

The 3 months correlation between Heungkuk and Nable is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Nable Communications go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Nable Communications

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 2.1 times more return on investment than Nable Communications. However, Heungkuk Metaltech is 2.1 times more volatile than Nable Communications. It trades about 0.19 of its potential returns per unit of risk. Nable Communications is currently generating about 0.13 per unit of risk. If you would invest  482,000  in Heungkuk Metaltech CoLtd on September 26, 2024 and sell it today you would earn a total of  67,000  from holding Heungkuk Metaltech CoLtd or generate 13.9% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Nable Communications

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech sustained solid returns over the last few months and may actually be approaching a breakup point.

Nable Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nable Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nable Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heungkuk Metaltech and Nable Communications

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

The idea behind Heungkuk Metaltech CoLtd and Nable Communications 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.