Correlation Between SBI Investment and Narae Nanotech

Can any of the company-specific risk be diversified away by investing in both SBI Investment and Narae Nanotech 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 SBI Investment and Narae Nanotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBI Investment KOREA and Narae Nanotech Corp, you can compare the effects of market volatilities on SBI Investment and Narae Nanotech 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 SBI Investment with a short position of Narae Nanotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Narae Nanotech.

Diversification Opportunities for SBI Investment and Narae Nanotech

0.33

Correlation Coefficient

SBI Investment  Narae Nanotech

Weak diversification

The 3 months correlation between SBI and Narae is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Narae Nanotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Narae Nanotech Corp and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Narae Nanotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Narae Nanotech Corp has no effect on the direction of SBI Investment i.e., SBI Investment and Narae Nanotech go up and down completely randomly.

Pair Corralation between SBI Investment and Narae Nanotech

Assuming the 90 days trading horizon SBI Investment is expected to generate 3.38 times less return on investment than Narae Nanotech. In addition to that, SBI Investment is 1.67 times more volatile than Narae Nanotech Corp. It trades about 0.11 of its total potential returns per unit of risk. Narae Nanotech Corp is currently generating about 0.64 per unit of volatility. If you would invest  292,000  in Narae Nanotech Corp on September 25, 2024 and sell it today you would earn a total of  155,000  from holding Narae Nanotech Corp or generate 53.08% return on investment over 90 days.

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

SBI Investment KOREA  vs.  Narae Nanotech Corp

SBI Investment KOREA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Narae Nanotech Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Narae Nanotech Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Narae Nanotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Investment and Narae Nanotech

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

The idea behind SBI Investment KOREA and Narae Nanotech Corp 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.