Correlation Between Namhwa Industrial and Korean Air
Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Korean Air 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 Korean Air 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 Korean Air Lines, you can compare the effects of market volatilities on Namhwa Industrial and Korean Air 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 Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Korean Air.
Diversification Opportunities for Namhwa Industrial and Korean Air
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Namhwa and Korean is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Korean Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Air Lines 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 Korean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Air Lines has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Korean Air go up and down completely randomly.
Pair Corralation between Namhwa Industrial and Korean Air
Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 0.97 times more return on investment than Korean Air. However, Namhwa Industrial Co is 1.04 times less risky than Korean Air. It trades about 0.12 of its potential returns per unit of risk. Korean Air Lines is currently generating about 0.06 per unit of risk. If you would invest 486,500 in Namhwa Industrial Co on September 25, 2024 and sell it today you would earn a total of 56,500 from holding Namhwa Industrial Co or generate 11.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Namhwa Industrial Co vs. Korean Air Lines
Performance |
Timeline |
Namhwa Industrial |
Korean Air Lines |
Namhwa Industrial and Korean Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Namhwa Industrial and Korean Air
The main advantage of trading using opposite Namhwa Industrial and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Korean Air 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 Korean Air will offset losses from the drop in Korean Air's long position.Namhwa Industrial vs. Youngsin Metal Industrial | Namhwa Industrial vs. Kakao Games Corp | Namhwa Industrial vs. Tway Air Co | Namhwa Industrial vs. ECSTELECOM Co |
Korean Air vs. Busan Industrial Co | Korean Air vs. Busan Ind | Korean Air vs. Mirae Asset Daewoo | Korean Air vs. Shinhan WTI Futures |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |